The U.S. Senate passed the “No Tax on Tips Act” in a surprise unanimous vote on Tuesday, advancing a bipartisan bill that would create a tax deduction of up to $25,000 for cash tips reported to employers for payroll tax withholding.
The measure, introduced by Sen. Ted Cruz (R-Texas) in January with co-sponsors including Nevada’s Democratic Sens. Jacky Rosen and Catherine Cortez Masto, now heads to the House.
Sen. Rosen called for the bill’s passage via a unanimous consent request, a process typically reserved for routine matters, and no senator objected.
“This bipartisan bill is a good idea. It has support from Democrats and Republicans, so we should pass it, well, as soon as possible, without any poison pills,” Rosen said on the Senate floor, per The Guardian.
She added, “Nevada has more tipped workers per capita than any other state. So this bill would mean immediate financial relief for countless hard-working families,” according to NBC News.
Rosen also noted the idea’s origins: “‘No Tax on Tips’ was one of President Trump’s key promises to the American people, which he unveiled in my state of Nevada.”
The legislation gained traction after Trump campaigned on it in 2024, followed by now-former Vice President Kamala Harris’ endorsement. It restricts the tax break to workers earning $160,000 or less in 2025, with the cap adjusting for inflation in future years. The U.S. Department of the Treasury would be required to list tip-receiving occupations within 90 days of enactment.
Senate Minority Leader Chuck Schumer (D-NY) also supported the bill, stating, “Working Americans — from servers, to bartenders, delivery drivers, and everything in between — work hard for every dollar they earn and are the ones who deserve tax relief, not the ultra-rich,” per NBC.
However, economists and labor advocates have raised concerns. The Brookings Institute found that 37% of tipped workers already pay no federal income tax due to low earnings, suggesting the bill would benefit only a small segment of the 5% of low-paid tipped workers. Instead, critics of the bill say that eliminating sub-minimum wages for tipped workers would be more beneficial.
Lena Simet of Human Rights Watch warned, “Without having these earnings floors in place, the minimum wage floor and calling for an increase, workers are vulnerable to exploitation and inequality in the labor market, which is harmful overall for the economy.”
It is unclear whether House Republicans will choose to consider the bill as part of a broader tax package or as standalone legislation.
“Whether it passes free-standing or as part of the bigger bill, one way or another, ‘No Tax on Tips’ is going to become law and give real relief to hard-working Americans,” Cruz said on the floor, per NBC. “So I’m proud of what the Senate just did, and I commend Democrats and Republicans, even at a time of partisan division, coming together and agreeing on this commonsense policy.”