In an unexpected move, the Republican-led Senate on Tuesday passed the ‘No Tax on Tips Act’, supporting an idea that gained attention during US President Donald Trump’s 2024 campaign.
What does ‘no tax on tips’ mean?
The new legislation allows workers to claim a tax deduction of up to $25,000 on tips. This only applies to cash tips that are reported to employers for payroll tax purposes. Only workers who make $160,000 or less in 2025 can get this benefit. This income limit will go up over time as inflation increases.
Senator Ted Cruz from Texas introduced the bill in January, along with support from both parties, including Nevada’s Democratic senators Jacky Rosen and Catherine Cortez Masto.
Rosen in Tuesday asked the Senate to approve the bill through a “unanimous consent” request, reported NBC News. This process lets any one senator block a bill, and it’s usually used for routine matters. Important tax bills are usually handled with more debate. But in this case, no senator objected, so the bill was approved without delay.
Rosen said that Nevada has the highest number of tipped workers compared to its population, so this bill would bring quick financial relief to many hardworking families. She added that the idea of not taxing tips was one of President Trump’s major promises, first shared in Nevada, and that she supports good ideas no matter who suggests them.
The bill will now move to the House, where Republicans have been trying to include it in a larger package of Trump’s plans. However, since many Democrats also support the idea, Republican leaders might choose to pass it on its own instead. This would help reduce the overall cost of the larger package or let them use the money for something else.