The U.S. Senate passed legislation on Tuesday to eliminate federal taxes on tips. The Senate’s vote comes after President Donald Trump made the promise of “no tax on tips” a major issue during the 2024 presidential election.
According to The Hill, the bill proposing a tax deduction for tips was brought to the Senate floor on Tuesday by Sen. Jacky Rosen (D-Nev.) in expectation of pushback against the legislation forcing the bill to be blocked. However, instead of facing pushback, the legislation was moved forward by Sen. Ted Cruz (R-Texas), who was the first to introduce the bill in the Senate. The Hill reported that the legislation was ultimately approved by unanimous consent.
According to NBC News, the bill eliminating federal taxes on tips was first introduced by Cruz in January. The outlet noted that the bill would create a tax deduction of up to $25,000 for wages earned as tips if it is passed by the U.S. House of Representatives and signed by the president.
NBC News reported that only employees who earn $160,000 or less in 2025 would be eligible for the tax deduction. However, the outlet noted that the $160,000 limit would increase with inflation in future years if the legislation is passed into law.
READ MORE: Military bonuses would be tax exempt under new bill
“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 in remarks from the floor of the U.S. Senate on Tuesday. “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.”
Following the bill’s approval in the Senate on Tuesday, Rosen described the Senate’s unanimous vote as “great news for Nevada,’ according to The Hill.
Rosen added, “This bill is not the be-all, end-all, but it’s going to offer immediate financial relief while the Senate continues to work to lower costs and find other avenues of relief for hard-working families.”
According to The Hill, the “no tax on tips” legislation is now expected to head to the House of Representatives for consideration. The outlet noted that Republican lawmakers in the House of Representatives are debating whether to include the bill as part of Trump’s “big, beautiful bill” or whether to pass the legislation separately.
