The U.S. Senate unanimously passed the “No Tax on Tips Act” on May 20, 2025, delivering a significant legislative victory for President Donald Trump’s economic agenda. Introduced by Senator Ted Cruz (R-TX), the bill allows tipped workers to deduct up to $25,000 in reported cash tips from federal income taxes, provided their total compensation does not exceed $160,000 annually. The legislation also expands employer tax credits to include payroll taxes on tips received in beauty and personal care services.
The bill’s passage was facilitated by Senator Jacky Rosen (D-NV), who brought it to the floor under unanimous consent procedures. This strategic move challenged any potential opposition, resulting in a 100-0 vote.
The “No Tax on Tips Act” now advances to the House of Representatives, where Speaker Mike Johnson (R-LA) is overseeing a broader reconciliation package that includes similar provisions. This larger legislative effort encompasses additional tax reforms, such as eliminating taxes on overtime pay and auto loan interest, while also addressing federal spending and debt limit considerations.
The bill has garnered bipartisan support, with both President Trump and Vice President Kamala Harris endorsing the elimination of taxes on tips during the 2024 presidential campaign.
