In a rare display of bipartisan agreement, the U.S. Senate has unanimously approved the No Tax on Tips Act, a measure designed to provide tax relief for millions of Americans who work in jobs where tips make up a large part of their income. The bill, introduced by Senator Ted Cruz (R-Texas) and Senator Jacky…
In a rare display of bipartisan agreement, the U.S. Senate has unanimously approved the No Tax on Tips Act, a measure designed to provide tax relief for millions of Americans who work in jobs where tips make up a large part of their income. The bill, introduced by Senator Ted Cruz (R-Texas) and Senator Jacky Rosen (D-Nevada), would allow service workers to deduct a portion of their tip income—up to $25,000 per year—from federal taxes.
This change applies only to tips, not to wages, salaries, or employer-paid bonuses. Workers would still be required to report tips for recordkeeping purposes, but the deduction would reduce their overall taxable income. Supporters of the legislation argue that the measure will help employees in the food service, hospitality, and delivery industries keep more of their hard-earned money. Senator Cruz stated that the law “gives workers a fair chance to benefit from their efforts,” while Senator Rosen emphasized its importance for states with tourism-driven economies like Nevada.
The bill has drawn praise from many restaurant and service worker associations, though some experts have raised questions about how the deduction might affect Social Security contributions and wage structures. Despite these debates, the Senate’s unanimous vote signals strong political support.
The legislation now heads to the House of Representatives, where lawmakers will continue discussions. If passed and signed into law, the No Tax on Tips Act would mark a significant change in the way the U.S. tax system treats tipped income, providing meaningful financial relief to service workers nationwide.
