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Senate Passes Bill Allowing $25K Tip Tax Deductions

5/21/2025

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Summary

Story summary

In a significant win for service industry workers, the U.S. Senate has unanimously approved the "No Tax on Tips Act," enabling employees to deduct up to $25,000 in reported cash tips from their federal taxes. Spearheaded by Senator Ted Cruz, this bill aims to support those earning under $160,000 as it heads to the House, where bipartisan backing could ensure its swift passage.

History

Historical Context

The "No Tax on Tips Act," recently approved by the U.S. Senate, echoes past efforts to support low-wage workers, similar to the Making Work Pay tax credit from 2009. Historically, tipped workers have faced income instability, with their wages often tied to customer generosity. This legislation aims to alleviate some financial burdens, reflecting ongoing debates about fair compensation in the service industry.

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Story summary

In a significant win for service industry workers, the U.S. Senate has unanimously approved the "No Tax on Tips Act," enabling employees to deduct up to $25,000 in reported cash tips from their federal taxes. Spearheaded by Senator Ted Cruz, this bill aims to support those earning under $160,000 as it heads to the House, where bipartisan backing could ensure its swift passage.

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