Tax-Free Tips: Cruz's Bill Wins Bipartisan Support, Heads to House
Senate Approves Trump-Cruz Proposal to Eliminate Taxes on Tips with Surprising Assistance from Democrats
The "No Tax on Tips" bill, initially championed by Sen. Ted Cruz, R-Texas, has gained unexpected momentum following a recent vote in the Senate. With a heavy emphasis on relieving the financial burden on working-class Americans, this bipartisan bill aims to make tips tax-exempt, giving a much-needed boost to service industry workers.
In a surprising turn of events, Sen. Jacky Rosen, D-Nev., stepped up to speak in favor of the bill and submitted a unanimous consent request. With no objections, the bill swiftly passed through the Senate, thanks to the support of Senators from both sides of the aisle.
"No Tax on Tips was one of President Trump's key promises to the American people, which he unveiled in my state of Nevada - and I am not afraid to embrace a good idea, wherever it comes from," Rosen stated, expressing her support for the bill originally drafted by Cruz.
The bill, which Sen. Cruz's office and Sen. Rosen have signed onto, would exempt cash tips and card-charged gratuities from federal income tax via a 100% deduction come Tax Day. By protecting the hard-earned income of blue-collar workers, this legislation hopes to provide immediate financial relief to those living paycheck-to-paycheck.
While the bill's passage in the Senate marks a significant milestone, the "No Tax on Tips Act" now heads to the House for consideration. Sen. Cruz has called on the lower chamber to quickly pass their version and send it to President Trump for his signature.
In terms of the House's version, it includes the no tax on tips provision without a cap but limited to 2025 through 2028. However, it differs from the Senate bill in its lack of a sunset clause and a Social Security number requirement. Despite these differences, the unanimous Senate vote indicates bipartisan support for the bill, suggesting that the House's version may face fewer obstacles in its approval.
The passthrough of the "No Tax on Tips Act" would represent a net positive for the industry and its workers, as it aims to address the financial challenges faced by workers in the service sector. By removing the tax burden from tips, this legislation aims to help those who are working tirelessly while juggling rising costs, ultimately contributing to their financial stability.
Enrichment Data:
Senate Unanimous Consent Request:
A unanimous consent request is a motion that, once agreed upon without opposition, allows legislators to pass a bill quickly, bypassing the requirement for a full debate and vote. In this case, Sen. Jacky Rosen lodged a unanimous consent request for the "No Tax on Tips" bill, which subsequently passed without objection.
House Bill vs. Senate Bill:
The House's version of the bill includes a no tax on tips provision without a cap, but this provision is limited to 2025 through 2028. It does not contain a sunset clause or a Social Security number requirement, key differences from the Senate's bill.
Individuals in occupations that traditionally receive tips, excluding highly compensated employees (those earning $160,000 or more in 2025), will be eligible for the deduction under the provisions of the bill.
- The "No Tax on Tips" bill, currently in the House, maintains a provision to exempt tips from federal income tax, as proposed by its Senate counterpart.
- The House version ensures this tax relief for eligible workers from 2025 to 2028 without a cap, in contrast to the Senate bill which contains a sunset clause and a Social Security number requirement.
- If passed, the "No Tax on Tips Act" is expected to deliver immediate financial aid to service industry workers, in accordance with policy-and-legislation aimed at easing the financial burden on working-class Americans.
