Senators Unite Over Ending Taxes On Tips

When it comes to taxes, even members of the same party can struggle to agree, as the fight over the specifics of President Trump’s “big, beautiful” bill in the House shows. But on Tuesday, the Senate voted 100–0 to pass the No Tax On Tips Act, a stand-alone measure similar to one of that bill’s most popular provisions.

Eliminating taxes on tips has provoked more agreement among both parties than the expulsion of former Rep. George Santos ever since Trump promised it on the campaign trail. The No Tax On Tips Act was introduced by Sen. Ted Cruz in January, and a Democrat brought it to the Senate floor this week.

But…experts believe creating a federal tax deduction of up to $25,000 on tips for employees making $160,000 or less annually will have minimal impact:

• According to the Budget Lab at Yale, only 2.5% of all workers are in tipped jobs, and 37% of tipped workers don’t pay federal income taxes already due to low earnings. Per the Tax Policy Center, having no tax on tips would provide an average savings of ~$1,800 per year.
• Critics say this hampers the fight for raising “subminimum” hourly wages, which are as low as $2.13 in some states for tipped workers.

What’s next? House Republicans can call a vote on the bill. If it passes, it would only need Trump’s signature to become law.—DL