In a stunning display of bipartisan unity, the U.S. Senate voted 100-0 on May 21, 2025, to pass the No Tax on Tips Act, a groundbreaking bill led by Senator Ted Cruz (R-Texas). This legislation exempts tips from federal income tax, delivering a major win for millions of tipped workers across America, from waiters and bartenders to hairdressers and delivery drivers. Here’s everything you need to know about this historic moment and what it means for workers!
A Victory for Tipped Workers
The No Tax on Tips Act, introduced by Senator Cruz and co-sponsored by a bipartisan group including Senators Jacky Rosen (D-Nev.), Catherine Cortez Masto (D-Nev.), Steve Daines (R-Mont.), Rick Scott (R-Fla.), Pete Ricketts (R-Neb.), and Kevin Cramer (R-N.D.), aims to put more money back in the pockets of service industry workers. By allowing a 100% above-the-line deduction on tips up to $25,000 annually, the bill ensures that cash, credit card, or check tips are no longer subject to federal income tax. However, tips remain subject to payroll taxes for Social Security and Medicare, and workers earning over $150,000 annually are ineligible for the exemption, targeting the benefit to traditional tipped professions.
“This is a historic day for America’s workers,” Senator Cruz said in a statement. “The No Tax on Tips Act is a commonsense solution to help waiters, bartenders, and other tipped workers keep more of their hard-earned money. I’m proud to lead this bipartisan effort, and I urge the House to act quickly to get this to President Trump’s desk.”
Why This Matters
The bill fulfills a campaign promise by President Donald Trump to eliminate taxes on tips, addressing economic challenges faced by service workers amid inflation. According to the National Restaurant Association, over 2.5 million Americans rely on tips as a significant part of their income, particularly in states like Nevada, where the service industry thrives. The legislation has garnered support from groups like the International Franchise Association, which called it a “lifeline for small businesses and their employees.”
The unanimous 100-0 Senate vote is a rare feat in today’s polarized political climate, signaling strong support across party lines. A companion bill in the House, led by Representatives Vern Buchanan (R-Fla.) and Byron Donalds (R-Fla.), is now under consideration, with Cruz pushing for swift passage to make the bill law.
The Debate: Cheers and Concerns
While the bill has been celebrated as a victory for tipped workers, it’s not without critics. The Center for American Progress argues that the exemption benefits only a small fraction of low-wage workers (about 2.5% of the U.S. workforce) and could lead to significant tax revenue losses, estimated at $150–250 billion over a decade. Some worry that high-income professionals, like hedge fund managers, might exploit loopholes by reclassifying income as tips, despite the $150,000 income cap. Others question why similar tax relief isn’t extended to non-tipped low-wage workers, such as cashiers or janitors.
Supporters counter that the bill directly addresses the needs of service workers who rely on tips to make ends meet, especially in high-cost-of-living areas. “This is about fairness,” said Senator Rosen. “Tipped workers deserve to keep what they earn without Uncle Sam taking a cut.”
What’s Next?
With the Senate’s unanimous approval, all eyes are on the House to pass the companion bill. If successful, the No Tax on Tips Act could soon be signed into law by President Trump, delivering immediate relief to tipped workers filing taxes in 2026. The bill’s passage could also spark broader discussions about tax reforms for other working-class Americans.
What do you think about this historic vote? Is the No Tax on Tips Act a game-changer for workers, or does it need more tweaks to be fair? Share your thoughts in the comments and let’s get the conversation going! 💬
