On May 20, a bipartisan bill passed unanimously in the U.S. Senate that would exempt tips from federal income tax. The No Tax on Tips Act was introduced by Sen. Ted Cruz (R-TX) and co-sponsored by Sen. Jacky Rosen (D-NV). If enacted, it would create a deduction of up to $25,000 a year for certain types of cash tips earned by eligible workers. The bill would still have to pass the U.S. House and be signed by President Trump to become law. The House Republican tax and spending package (called The One, Big, Beautiful Bill) also has a no-taxes-on-tips provision. But proponents of the stand-alone No Tax on Tips Act think it may have a better chance of passing because it’s bipartisan.
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