Senator Ted Cruz announced that the Senate unanimously passed his “No Tax on Tips Act,” a bill that fulfills Donald Trump’s campaign pledge to eliminate federal taxes on tipped income. The bill is designed to help millions of American workers, especially in service jobs, where tips make up a large portion of their earnings.
The legislation defines tips as income received through cash, cards, checks, or tip-sharing, and allows workers to deduct 100% of that income from taxes. To avoid abuse, only workers in roles that received tips before December 31, 2024, will qualify.
The Senate version of the bill limits the annual deduction to $25,000 and phases it out for higher earners. The House version removes the cap but disqualifies those earning over $160,000. If passed, the law would apply from 2025 through 2028.
Cruz highlighted this bill as part of a broader Republican effort to cut taxes and boost job growth. With bipartisan support from figures like Chuck Schumer and Jackie Rosen, the measure is expected to move forward in the GOP-led House as part of a larger tax reform plan.
