Senate Unites to Pass ‘No Tax on Tips’ Bill, Offering Relief to Millions of Service Workers
In a rare show of unity, the U.S. Senate has unanimously passed the No Tax on Tips Act — a groundbreaking bill that would exempt tip income from federal taxes, putting more money directly into the hands of America’s service industry workers.
Introduced by Sen. Ted Cruz (R-TX) and co-sponsored by Sen. Jacky Rosen (D-NV), the bill aims to boost workers in industries where tips make up the bulk of their income — including food service, hospitality, and delivery.
“This is about fairness,” said Cruz. “These workers are putting in long hours and living paycheck to paycheck. They deserve to keep more of what they earn.”
Rosen emphasized the economic importance of tipped workers in states like Nevada, calling them “the backbone of the economy” and saying the bill gives them “the respect and support they deserve.”
What’s in the Bill?
The No Tax on Tips Act would amend the U.S. tax code to exclude tip income from federal income taxes. Key points include:
- Tips would still need to be reported by workers and employers.
- No federal income tax would be applied to reported tips.
- Wages and employer-paid bonuses remain taxable.
Supporters say the change would not only raise take-home pay for millions of Americans but also reduce red tape for small business owners and simplify tax reporting.
Why It Matters
Worker advocates and service employees are celebrating the bill, estimating it could save some workers hundreds or even thousands of dollars each year.
“This bill recognizes the essential role tipped workers play — and gives them a well-deserved break,” said a spokesperson for the National Restaurant Association.
While some tax analysts have raised concerns about compliance and reduced contributions to Social Security, lawmakers argue these challenges are solvable and outweighed by the bill’s benefits.
What’s Next?
The bill now heads to the House of Representatives, where debate is expected in the coming weeks. If passed and signed into law, the measure could usher in one of the most significant changes to service worker taxation in decades.