The Senate delivered a noteworthy victory for one of President Donald Trump's campaign promises on Tuesday afternoon by passing the No Tax on Tips Act by unanimous consent. The bill was introduced by Sens. Ted Cruz (R-TX) and Jacky Rosen (D-NV). The bill now heads to the House for consideration.
I just went to the Senate floor and passed our bipartisan No Tax On Tips Act by unanimous consent.
— Senator Jacky Rosen (@SenJackyRosen) May 20, 2025
NV has the highest concentration of tipped workers in the nation – and this bill will finally bring them much-deserved relief. pic.twitter.com/KPdmikZ2nJ
During the 2024 campaign, Trump made the promise of no tax on tips a central theme. It was such a good idea that not only did all senators vote in favor on Tuesday, but then Vice President Kamala Harris, as the Democratic nominee, copied the proposal for her own campaign last summer.
In a statement posted to his official X account, Cruz referenced that promise from Trump. "President Trump made a promise to the American people that he would eliminate taxes on tips," he mentioned, also going on to explain how this bill came about. "In Congress, I formed a bipartisan, bicameral coalition to get that done, and in the Senate introduced the No Tax on Tips Act. Today, I went with Senator Rosen to the floor to secure Senate passage of the bill. This legislation will have a lasting impact on millions of Americans by protecting the hard-earned dollars of blue-collar workers, the very people who are living paycheck-to-paycheck. I urge my colleagues in the House to pass this important bill and send it to the President’s desk to be signed into law," Cruz added.
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RELEASE: Sen. Cruz’s 'No Tax on Tips' Legislation Passes Senate https://t.co/Uu4SwA5uM3 pic.twitter.com/YJ9X3wjpaZ
— Senator Ted Cruz (@SenTedCruz) May 20, 2025
"The bill exempts 'cash tips'—cash, credit and debit card charges, and checks—from federal income tax by allowing taxpayers to claim a 100% deduction at filing for tipped wages. The updated text includes guardrails to ensure only traditionally tipped employees will benefit from No Tax on Tips," a press release from Cruz's office read.
As a summary of the bill also reads:
This bill establishes a new tax deduction of up to $25,000 for tips, subject to limitations. The bill also expands the business tax credit for the portion of payroll taxes an employer pays on certain tips to include payroll taxes paid on tips received in connection with certain beauty services.
Under the bill, the new tax deduction for tips is limited to cash tips (1) received by an employee during the course of employment in an occupation that customarily receives tips, and (2) reported by the employee to the employer for purposes of withholding payroll taxes. (Under current law, an employee is required to report tips exceeding $20 per month to their employer.)
Further, an employee with compensation exceeding a specified threshold ($160,000 in 2025 and adjusted annually for inflation) in the prior tax year may not claim the new tax deduction for tips.
Finally, the bill expands the business tax credit for the portion of payroll taxes that an employer pays on certain tips to include payroll taxes paid on tips received in connection with barbering and hair care, nail care, esthetics, and body and spa treatments. (Under current law, an employer is allowed a business tax credit for the amount of payroll taxes paid on certain tips received by an employee in connection with providing, delivering, or serving food or beverages.)
The "Tips Act" has been trending over X on Tuesday in light of the Senate vote. The provision is also a major part of Trump's "big, beautiful bill" that he and the White House has been trying to sell. Trump himself even came to Capitol Hill on Tuesday in order to urge Republicans to stick together and support his agenda. The hope is to have that bill on the president's desk by the 4th of July.
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