Senate Passes “No Tax on Tips” Bill, Advancing Key Trump Campaign Promise
WASHINGTON, D.C. — The U.S. Senate unanimously passed a major tax reform measure Tuesday aimed at delivering on former President Donald Trump’s campaign pledge to eliminate taxes on tips. The legislation, titled the “No Tax on Tips” Act, proposes a new federal tax deduction for tipped workers and enhanced tax credits for businesses that employ them.
Under the Senate bill, workers who receive cash tips in jobs where tipping is customary and reported for payroll tax purposes would be eligible for a deduction of up to $25,000 annually. The measure also includes provisions to expand the business tax credit available to employers in the service industry who accurately report employee tips.
The proposal is designed to provide financial relief to millions of service workers, including servers, bartenders, baristas, and other tipped employees, by reducing their taxable income. Supporters argue that it acknowledges the critical role tips play in supplementing base wages, particularly in positions with lower hourly rates.
The House of Representatives has yet to vote on its own version of the tax break. If approved, the two chambers must reconcile their respective versions before the bill can be sent to the president for final approval.
As the legislation advances, service industry workers nationwide are closely watching its progress. While the proposed tax relief has generated optimism, questions remain about how the deductions will be implemented and whether it will change take-home pay or tax liability for workers.
If enacted, the “No Tax on Tips” bill would mark a significant shift in the federal tax structure for one of the nation’s largest workforce segments.
