Breaking News: Senate Passes No Tax on Tips
In a surprise victory for tipped workers, the U.S. Senate passed the No Tax on Tips Act yesterday through unanimous consent. Nevada’s own Senator Jacky Rosen (D) brought the bill to the floor, and not a single senator objected.
“Tips aren’t extra,” Rosen said on the Senate floor. “It’s part of their income that they use to make ends meet.”
The bill, first introduced by Senator Ted Cruz (R) with bipartisan support, would create a tax deduction of up to $25,000 for tips for workers earning less than $160,000 annually.
This comes as House Republicans have also included a “no tax on tips” plan in their budget bill, which would run through 2028. The proposal fulfills one of President Trump’s key campaign promises made in Nevada.
“We’re gonna get it for you — no tax on tips,” Trump promised during a rally in Las Vegas this January. “If you’re a restaurant worker, a server, a valet, a bell hop, a bartender… your tips will be 100% yours.”
Why This Matters to Conservatives
For Nevada, this matters a lot. Our state has the highest concentration of tipped workers in the nation. About one in four Nevada workers is in the hospitality industry. Many believe this campaign promise helped Trump win Nevada’s electoral votes in 2024.
This plan lines up perfectly with core conservative values of limited government and letting people keep more of what they earn.
Think about it: when the government takes less of your money, you have more freedom to decide how to spend or save it yourself. That’s real economic liberty.
Ted Pappageorge from Nevada’s Culinary Union put it simply:
“Tip earners are willing to pay their fair share, we just think there’s been an overreach by the IRS.”
The plan also rewards work. These aren’t handouts – these are hardworking Americans who stand on their feet for hours, provide great service, and earn those tips through their efforts.
The Politics: From Campaign Promise to Reality
What started as a campaign promise in Las Vegas has turned into a rare political issue with bipartisan support.
Even Nevada Attorney General Aaron Ford, a Democrat, recently called on President Trump to fulfill his campaign promise on tax-free tips. It seems everyone wants to be on the winning side of this popular issue.
Senator Cruz put it best on the Senate floor after the surprise vote:
“The certainty that we will see no tax on tips become the law of the land, I think, is very close to 100 percent.”
Many political analysts believe this issue helped Trump win Nevada in the 2024 election – a state Republicans hadn’t carried in decades. It connected with everyday workers in a direct, personal way that transcended typical party lines.
How It Would Work
Under the Senate-passed bill, workers in jobs that “traditionally receive tips” could take a tax deduction of up to $25,000 from their federal income taxes for those tips. This would apply to:
- Restaurant servers
- Bartenders
- Hotel workers
- Casino employees
- Rideshare drivers and other contractors
The plan includes some common-sense limits. There’s an income cap of $160,000, meaning very high earners wouldn’t benefit. And the Treasury Department would create rules to prevent companies from trying to reclassify regular pay as “tips” just to avoid taxes.
Workers would still pay payroll taxes (the ones that fund Social Security and Medicare) on their tips.
President Trump made a promise to the American people that he would eliminate taxes on tips.
Today, I went with Senator Rosen to the floor to secure Senate passage of the bill.
I urge my colleagues in the House to pass this important bill and send it to the President’s… pic.twitter.com/4vqk1uEzVB
— Senator Ted Cruz (@SenTedCruz) May 20, 2025
What Critics Are Saying
Not everyone loves this idea. Some economists worry it could have unintended effects. Heidi Shierholz from the Economic Policy Institute called it “terrible policy,” arguing that raising wages would be better than tax breaks.
Bill Gale, who worked in the George H.W. Bush administration, questioned whether this is the best way to help low-income workers since “the vast majority of low-income workers don’t get tips.”
The Committee for a Responsible Federal Budget estimates this could reduce government revenues by $150-250 billion over ten years if fully implemented.
Democrats generally prefer raising the minimum wage for tipped workers instead. Currently, the federal minimum wage for tipped workers is just $2.13 per hour (though Nevada requires the full minimum wage).
What’s Next
With the Senate’s surprise unanimous approval, the bill now heads to the House of Representatives. Meanwhile, House Republicans have included their version of the tip tax relief in their broader budget package.
There are two paths forward:
- The House could approve the standalone bill that just passed the Senate
- The tip tax relief could pass as part of the larger Republican budget bill
Republicans hope to finish by July 4th, though political battles over other parts of the budget could delay things.
Even Democrats who oppose parts of the Republican budget find themselves in an awkward position. They support the tip tax break but can’t fully back the larger bill due to other provisions.
What You Can Do
If you support this tax break for hardworking Americans, here are some ways to help:
- Contact your representatives in the House and urge them to quickly pass the Senate-approved bill.
- Talk to friends who work for tips and make sure they understand what’s at stake.
- If you’re in the service industry yourself, share your story about how this would help your family.
- Remember which politicians truly fought for this issue when it comes time to vote.
The fight for letting people keep more of their own money continues. For the bartender who remembers your favorite drink, the waitress who makes sure your food is perfect, and the bellhop who carries your bags – this could mean real money in their pockets, not Washington’s.
This article was written with the assistance of AI. Please verify information and consult additional sources as needed.