In an uncommon show of unity, the U.S. Senate has voted 100-0 in favor of the No Tax on Tips Act — a groundbreaking proposal aimed at ending federal income taxes on tipped earnings, a move that could benefit millions of workers in hospitality, food service, and delivery industries.
The bipartisan bill, introduced by Senator Ted Cruz (R-TX) and Senator Jacky Rosen (D-NV), marks a rare collaboration across party lines to support service employees whose livelihoods often rely on gratuities.
“This is about basic fairness,” Senator Cruz said. “These workers are hustling every day, often living paycheck to paycheck. It’s time they keep more of what they earn.”
Senator Rosen emphasized the importance of tipped workers in tourism-dependent states like Nevada, calling them the “backbone” of the economy who deserve financial relief and recognition.
What the Legislation Would Change
The No Tax on Tips Act proposes updates to the U.S. tax code that would:
- Make tip income exempt from federal income tax
- Still require tips to be reported, but no longer taxed federally
- Exclude wages or bonuses from the exemption — only customer-given tips would qualify
Supporters argue the bill would reduce the tax burden on low-income workers, simplify payroll processes for small businesses, and significantly boost take-home pay for employees in tipping-dependent industries.
Public Response and Next Steps
The proposal has been met with enthusiasm from worker advocates and service employees, many of whom say the change could result in hundreds to thousands of dollars saved per year.
Some tax analysts have raised questions about how the rule would be enforced and what the potential impact could be on Social Security and Medicare contributions, which are partially funded through wage taxes. Lawmakers, however, have suggested these concerns are addressable through regulation.
The bill now advances to the House of Representatives, where it will be debated further in the coming weeks. If passed there, it could become one of the most significant tax reforms affecting everyday American workers in recent years.
