Cruz is pushing the bill, which would remove tips from federal income tax and was championed on the campaign trail by Trump. The bill aims to help millions of American workers who rely on tips for a significant portion of their income.
“President Trump made a promise to the American people that he would eliminate taxes on tips. In Congress, I formed a bipartisan, bicameral coalition to get that done, and in the Senate introduced the No Tax on Tips Act. Today, I went with Senator Rosen to the floor to secure Senate passage of the bill,” Cruz said.
Cruz emphasized the potential impact of the legislation on working-class families: “This legislation will have a lasting impact on millions of Americans by protecting the hard-earned dollars of blue-collar workers, the very people who are living paycheck-to-paycheck. I urge my colleagues in the House to pass this important bill and send it to the President’s desk to be signed into law.”
The “No Tax on Tips Act” states that “cash tips” include checks, cash, credit card charges, and debit card charges. On their federal income tax forms, they can claim a 100% deduction for wages that were paid.
The bill’s new version has “guardrails” to ensure only tipped workers get the exemption. Cruz wants to cut taxes and create more jobs, which is what this congressional effort is all about.
He played a crucial role in the 2017 tax reform that significantly reduced taxes for individuals and businesses, and he has consistently supported making those tax cuts permanent.
Cruz also played a big role in passing the USMCA trade deal, which he sees as a win for Texas’s industry and agriculture industries. The U.S. Chamber of Commerce gave him the prestigious “Spirit of Enterprise” award for his work to help Texas companies.
As noted by CNBC, the bill is now in the GOP-controlled House.
Republicans suggested a tax benefit for tipped workers as part of a tax reform proposal announced by the Senate Finance Committee on Monday. In the next few weeks, GOP legislators will attempt to approve their multitrillion-dollar megabill.
The Senate plan, which seeks to fulfill President Trump’s “no tax on tips” campaign promise, is largely identical to a provision enacted by House Republicans in May as part of a domestic policy bill.
In all variants, the tax relief is structured as a deduction for eligible gratuities. The Senate bill defines such tips as those provided in cash, charged, or collected as part of a tip-sharing agreement.
The measure would allow taxpayers, including employees and independent contractors, to claim it from 2025 to 2028. Filers may benefit whether they itemize deductions on their tax filings or utilize the standard deduction.
Matt Gardner, senior scholar at the Institute on Taxation and Economic Policy, stated in an e-mail that the Senate proposal differs from the House version in two major areas.
First, Gardner noted that the Senate plan would set the tax deduction at $25,000 per year, but the House version would leave it uncapped.
He also noted that the income caps function differently under the Senate legislation.
The House measure eliminates the tax deduction once an individual’s annual income reaches $160,000.
In contrast, the Senate version would gradually diminish the value of the tax deduction if an individual’s income exceeded $150,000, or $300,000 for married couples. The Senate would reduce the tax break’s worth by $100 for every $1,000 of income beyond the threshold.
Senate Republicans, like those in the House, would restrict the tax benefit to tipped workers in jobs that “customarily and regularly” earned tips on or before December 31, 2024.
The bill language mandates the United States Treasury Secretary to publish a list of those jobs within 90 days of the legislation’s passage.
Top Democrats like New York Sen. Chuck Schumer and Nevada Sen. Jackie Rosen have praised the measure.
