Sen. Ted Cruz (R-TX) announced a major legislative victory after the U.S. Senate unanimously passed his “No Tax on Tips Act” by a 100–0 vote, fulfilling a key campaign promise of President Donald Trump. The bill exempts tipped income—cash, credit card, or shared—from federal income taxes, offering significant relief to millions of service industry workers. Cruz emphasized the bill’s benefit to blue-collar Americans, saying it protects workers living paycheck to paycheck.
The bill includes guardrails to ensure only traditionally tipped employees qualify and defines eligible tips comprehensively. It allows for a tax deduction from 2025 to 2028, available whether or not taxpayers itemize deductions. The Senate version sets a $25,000 annual deduction cap and phases out the benefit for individuals earning over $150,000 or couples over $300,000.
The House version, passed earlier, differs by offering an unlimited deduction and setting the income cap at $160,000. The measure now heads to the GOP-led House for final approval. The proposal has gained bipartisan praise, including support from Senate Majority Leader Chuck Schumer and Sen. Jackie Rosen (D-NV).
