Senate Unanimously Passes ‘No Tax On Tips Act’

On Tuesday, the GOP-led Senate unanimously passed bipartisan legislation from Sen. Ted Cruz (R-TX) that seeks to make good on President Donald Trump’s campaign promise for getting rid of taxes on tips.

Axios reported earlier in the day that Senate Republicans were likely to block a request for unanimous consent for Cruz’s measure by Sen. Jacky Rosen (D-NV) because the GOP-controlled House is working on Trump’s “one big, beautiful bill,” which has its own “No Tax On Tips” component.

However, that opposition did not materialize and Cruz’s “No Tax on Tips Act” passed by unanimous consent, which is an agreement that allows the upper chamber to bypass standard rules to speed up proceedings.

“President Trump made a promise to the American people that he would eliminate taxes on tips. In Congress, I formed a bipartisan, bicameral coalition to get that done, and in the Senate introduced the No Tax on Tips Act,” Cruz said in a statement.

“Today, I went with Senator Rosen to the floor to secure Senate passage of the bill,” he added. “This legislation will have a lasting impact on millions of Americans by protecting the hard-earned dollars of blue-collar workers, the very people who are living paycheck-to-paycheck. I urge my colleagues in the House to pass this important bill and send it to the President’s desk to be signed into law.”

According to a Congress.gov summary, the bill, as introduced, allows workers in tip-heavy jobs to deduct up to $25,000 in reported cash tips from their taxes unless they earned over a threshold, which is $160,000 for 2025 and adjusted annually for inflation. It also expands business tax credits to cover payroll taxes on tips from beauty services such as haircare and spa treatments.

Cruz’s office says the bill “exempts ‘cash tips’ — cash, credit and debit card charges, and checks — from federal income tax by allowing taxpayers to claim a 100% deduction at filing for tipped wages. The updated text includes guardrails to ensure only traditionally tipped employees will benefit from No Tax on Tips.”

The legislation now heads to the House, which is moving to pass through the reconciliation process a much larger bill that aims to provide funding for Trump’s domestic priorities, retain tax cuts from 2017, raise the debt limit, and more.

One of the megabill’s many provisions features a deduction for “qualified” tips for individuals who work in “an occupation which traditionally and customarily received tips” from 2025 through 2028. It also contains sections dedicated to some of Trump’s other ideas, including no tax on overtime and no tax on auto loan interest.

Democrats have joined Republicans in supporting the push for “No Tax On Tips.” In fact, Vice President Kamala Harris stole Trump’s proposal as they competed against each other for the White House in the 2024 election.

In a speech on the Senate floor, Rosen said that she wanted the legislation from Cruz to succeed rather than “forcing working families to choose between keeping their healthcare or keeping their tips” with the more comprehensive “one big, beautiful bill,” alluding to efforts by GOP lawmakers to rein in spending on programs such as Medicaid.