Bill to Make Tips Tax-Free
Senate Passes No Tax on Tips Act
In a rare bipartisan move, the U.S.
Senate unanimously approved the No Tax on Tips Act, which exempts tip income from federal taxation,
giving financial relief to service industry workers.
Why It Matters
“This is about fairness,” said Senator Ted Cruz, who introduced the bill.
“These workers are putting in long hours and living paycheck to paycheck.”
Co-sponsor Senator Jacky Rosen added that service employees are the “backbone of the economy” and deserve “the respect and support they deserve.”
What Changes
Tips must still be reported but would no longer be taxed federally.
The exemption applies only to tips, not wages or bonuses. Supporters argue it will increase take-home pay and ease burdens on small businesses.
Next Steps
Worker advocacy groups strongly support the bill.
It now heads to the House for debate in the coming weeks.
