On Tuesday, the Senate, led by the GOP, passed a new bill aimed at eliminating taxes on tips, fulfilling a promise made by former President Donald Trump during his campaign. The legislation, known as the "No Tax on Tips Act," was introduced by Senator Ted Cruz from Texas and received unanimous support from the Senate.
Earlier in the day, there were discussions about potential opposition to the bill from Senate Republicans. They were expected to block a request from Senator Jacky Rosen, a Democrat from Nevada, who wanted to fast-track the measure. This was because the GOP-controlled House is working on a larger bill that includes a similar "No Tax on Tips" provision. However, the anticipated pushback did not occur, allowing Cruz’s bill to pass smoothly.
Cruz expressed pride in the bill’s passage, noting that it will help millions of Americans, particularly those in blue-collar jobs who often rely on tips to make ends meet. He emphasized the importance of sending the bill to the House for approval, urging his colleagues to support it. The bill allows workers in tip-heavy jobs to deduct up to $25,000 in reported cash tips from their taxes, as long as their earnings do not exceed $160,000, which will be adjusted for inflation each year.
The legislation includes provisions to exempt cash tips, credit card tips, and checks from federal income tax, allowing workers to claim a full deduction when filing their taxes. Cruz’s office highlighted that the bill includes safeguards to ensure that only employees who traditionally earn tips benefit from this tax relief.
Now that the Senate has passed the bill, it moves to the House, which is busy crafting a larger piece of legislation that aims to fund various domestic priorities and maintain tax cuts from 2017. This larger bill also includes provisions related to overtime pay and auto loan interest.
Interestingly, the push for the "No Tax on Tips" initiative has garnered bipartisan support. Even Vice President Kamala Harris has shown interest in the idea, as both parties vie for voter approval ahead of the 2024 election. In a recent speech, Senator Rosen emphasized the need for the legislation to succeed, highlighting the struggles of working families who shouldn’t have to choose between healthcare and their tips.
As this legislation progresses, it reflects ongoing efforts in Congress to address the financial needs of workers and support those who rely on tips for their livelihoods.