No Tax on Tips Act Clears Senate With Unanimous Consent
Posted on: May 21, 2025, 08:05h.
Last updated on: May 21, 2025, 09:55h.
- The No Tax on Tips Act has passed the US Senate
- The bill would allow tipped workers to keep more of their gratuities
- Currently, tips are considered taxable income by the IRS
Tipped workers might soon be able to deduct a considerable portion of their annual income from their federal tax return.
On Tuesday, the United States Senate unanimously passed the No Tax on Tips Act. The bipartisan legislation, led by Sens. Ted Cruz (R-Texas) and Jacky Rosen (D-Nevada), would allow eligible tipped workers to deduct 100% of their cash, credit, debit, and check tips up to $25K per tax year.
President Donald Trump first suggested that tipped workers shouldn’t have their gratuities taxed by the federal government during his 2024 campaign. Kamala Harris followed in supporting such a change to the Internal Revenue Code.
“President Trump made a promise to the American people that he would eliminate taxes on tips. In Congress, I formed a bipartisan, bicameral coalition to get that done,” said Cruz.
“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.
Workers’ Victory
Cruz and Rosen’s No Tax on Tips Act passed the Senate through a procedural tool called a unanimous consent vote. Such a motion is typically reserved for noncontroversial measures.
Eliminating taxes on tipped workers — many of whom work in the hospitality industries, including the gaming sector — was uncontested in Congress’ higher chamber. Many of those workers have felt the higher costs that have come to the US economy in recent years.
Hardworking families in Nevada and all across this country are struggling to make ends meet because of the rising costs of everything, from groceries to housing, all of which have been made worse by Donald Trump’s tariffs. Nevadans, our families, we’re being squeezed and need relief,” Rosen said on the House floor.
“No Tax on Tips was one of President Trump’s key promises to the American people. I am not afraid to embrace a good idea, wherever it comes from,” Rosen continued.
Nevadans sent me here to fight for them — and I’m going to keep working to lower costs, raise wages, and make sure the people who power our economy, our working families, can keep more of what they earn,” Rosen added.
The Culinary Union, which represents approximately 60K gaming and hospitality workers in Las Vegas and Reno, applauded the passing of the No Tax on Tips Act and the Senate’s “taking on the cost of living for working families.”
Tax Limitations
The No Tax on Tips Act would only allow workers whose income is less than $160K in a given year to claim a tips deduction. The threshold would be adjusted annually for inflation.
Only jobs “which traditionally and customarily received tips on or before December 31, 2023,” would qualify for the tax relief.
Cruz and Rosen’s bill might face longer odds in the House, as the Republican-controlled lower chamber has supported including a tax deduction provision in its bigger budget bill. The component is part of a wider package that also seeks to cut certain Medicaid and SNAP benefits.
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