The Senate has unanimously approved the bipartisan “No Tax on Tips Act,” fulfilling one of President Trump’s campaign promises and potentially putting thousands of dollars back into the pockets of America’s service workers.
Key Takeaways
- The Senate unanimously passed legislation to exempt tipped wages from federal income tax, with deductions capped at $25,000
- The bipartisan bill was championed by Senators Ted Cruz (R-TX) and Jacky Rosen (D-NV), inspired by President Trump’s campaign promise
- Workers earning more than $160,000 annually are ineligible, ensuring benefits target those who need it most
- The bill now moves to the House of Representatives, where Democrats oppose it being bundled with broader Republican budget cuts
- Nevada, with its large service industry workforce, is expected to benefit significantly from this tax relief
Trump’s Campaign Promise Becomes Bipartisan Victory
In a rare display of bipartisan cooperation, the U.S. Senate has unanimously approved the “No Tax on Tips Act,” legislation that will exempt traditionally tipped employees from paying federal income tax on their gratuities up to $25,000. The bill, co-sponsored by Senators Ted Cruz (R-TX) and Jacky Rosen (D-NV), represents the fulfillment of a key promise made by President Trump during his campaign stops in Nevada, a state with one of the nation’s highest concentrations of service industry workers.
“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,” said Senator Rosen.
— Tom Emmer (@GOPMajorityWhip) May 20, 2025
Protection for Working Americans, Not the Wealthy
The legislation contains important safeguards to ensure tax relief benefits those who truly need it. Workers earning more than $160,000 annually will not be eligible for these deductions, effectively preventing wealthy executives and high-income earners from exploiting the tax break. This protection aligns with the bill’s core purpose of providing meaningful financial relief to service industry workers who often struggle with economic uncertainty and fluctuating incomes.
“If we are serious about providing service employees with financial relief, let’s do it now, let’s do it today!” urged Senator Rosen during her floor speech.
Political Maneuvering as Bill Heads to the House
Despite the unanimous Senate approval, the bill’s path forward faces potential complications. Democrats, including Senator Rosen, have criticized House Republicans for attempting to include the “No Tax on Tips Act” in a larger budget proposal that would cut programs like Medicaid and SNAP. Rosen has advocated for passing the bill as a standalone measure to provide immediate financial relief without entangling it with contentious budget cuts that could harm the very workers the tip tax exemption aims to help.
“We shouldn’t be forcing working families to choose between keeping their health care or keeping their tips,” stated Senator Rosen.
Senator Cruz, however, expressed confidence that the tax relief will ultimately become law, whether as a standalone bill or part of a larger package. The approval represents a policy win for President Trump, especially meaningful as he continues to implement his domestic agenda. With Nevada’s substantial service worker population, the economic impact could be particularly significant in a state where hospitality and food service industries employ a large percentage of the workforce.
