The Senate unanimously approves the “No Tax on Tips” bill, fulfilling a key Trump campaign promise to help millions of service workers keep more of their hard-earned money.
Key Takeaways
- The bipartisan “No Tax on Tips Act” passed the Senate unanimously, allowing service workers to deduct up to $25,000 in tips from federal income tax
- Championed by Senators Ted Cruz (R-TX) and Jacky Rosen (D-NV), the bill fulfills a campaign promise made by President Trump during a Las Vegas stop
- Only workers earning less than $160,000 annually will be eligible for the tax exemption, ensuring benefits target working-class Americans
- The legislation now moves to the House, where it faces potential challenges as Republicans and Democrats debate whether it should stand alone or be part of a larger package
- Nevada and other states with large service industry populations stand to benefit significantly from this tax relief measure
Bipartisan Victory for Service Workers
The U.S. Senate delivered a significant win for America’s service industry workers on Tuesday by unanimously passing the “No Tax on Tips Act.” This legislation, a key promise from President Trump’s campaign platform, exempts gratuities from federal income taxation for workers earning under $160,000 annually, with deductions capped at $25,000. The bill represents a rare moment of bipartisan cooperation in today’s divided political landscape, with Senators Ted Cruz (R-TX) and Jacky Rosen (D-NV) leading the charge to provide tangible financial relief to millions of hardworking Americans who depend on tips to make ends meet.
The legislation targets traditionally tipped employees in restaurants, hotels, salons, and other service industries where gratuities constitute a substantial portion of workers’ income. By eliminating federal taxation on these earnings, service workers will immediately see more money in their pockets. This approach aligns perfectly with President Trump’s economic vision of reducing tax burdens on working Americans while stimulating economic growth through increased consumer spending. The bill’s passage in the Senate marks a significant step toward implementing this vision and represents one of the first major legislative achievements of Trump’s agenda since his 2024 election victory.
From Campaign Promise to Legislative Reality
The bill’s journey began during President Trump’s campaign trail in Nevada, where he recognized the financial struggles of service industry workers in a state heavily dependent on tourism and hospitality. Senator Rosen, though a Democrat, acknowledged the merit of the proposal regardless of its political origin. “No tax on tips was one of President Trump’s key promises to the American people, which he unveiled in my state of Nevada. And, I am not afraid to embrace a good idea, wherever it comes from,” said Senator Rosen, Senator from Nevada.
The bill includes carefully crafted provisions to ensure the tax benefits reach those who truly need them. By limiting eligibility to workers earning less than $160,000 annually and capping the deduction at $25,000, the legislation prevents wealthy executives or high-income individuals from exploiting these tax benefits. This targeted approach ensures the tax relief goes directly to bartenders, servers, hotel staff, and other service workers whose livelihoods depend significantly on tips. Senator Cruz has expressed confidence that the “No Tax on Tips” will ultimately become law, whether as a standalone measure or incorporated into a larger legislative package.
Political Maneuvering and Next Steps
Despite the unanimous Senate approval, the bill’s journey through Congress has not been without political complications. House Republicans had initially included the tip tax exemption in a larger budget proposal that contained controversial cuts to programs like Medicaid and SNAP. Democrats, including Senator Rosen, pushed back against this approach, advocating for the measure to be passed independently. “We shouldn’t be forcing working families to choose between keeping their health care or keeping their tips,” stated Rosen, Senator from Nevada.
“If we are serious about providing service employees with financial relief, let’s do it now, let’s do it today!” urged Rosen, Senator from Nevada.
The bill now heads to the House of Representatives, where its path forward remains uncertain. While there is broad support for the concept, political disagreements persist about whether it should advance as a standalone measure or be incorporated into larger legislation. The Senate’s unanimous approval sends a strong signal that this is an issue that transcends partisan divides, potentially easing its passage through the House. For millions of service workers across America, particularly in states like Nevada with large hospitality sectors, the outcome of this legislative process will have immediate and tangible impacts on their financial well-being.
