No Tax on Tips

Extracted Attributes

• Type

  Legislative Proposal

• Exclusions

  Highly compensated employees

• Included In

  One Big Beautiful Bill Act

• Jurisdiction

  United States (Federal)

• Primary Goal

  Eliminate federal income tax on qualified tips

• Current Status

  Signed into law

• Related Legislation

  No Tax on Tips Act, Make American Families and Workers Thrive Again Act

• Affected Occupations

  Traditionally tipped occupations (e.g., waiters, hospitality workers, beauticians)

• Maximum Deduction (Senate Version)

  $25,000

• Estimated Cost (Peterson Foundation)

  $110 billion over ten years

Timeline

• Both main candidates in the US presidential election campaign supported legislation to remove tax from tips. (Source: Wikipedia)

  2024

• Senator Ted Cruz introduced the 'No Tax on Tips Act' (S.129) in the Senate. (Source: Web Search)

  2025-01-16

• The House Ways and Means Committee approved the 'Make American Families and Workers Thrive Again Act,' which included a 'no tax on tips' provision. (Source: Web Search)

  2025-05-14

• The United States Senate passed the bipartisan 'No Tax on Tips Act' by unanimous consent. (Source: Wikipedia, Web Search)

  2025-05-20

• The 'No Tax on Tips Act' (S.129) was held at the desk in the House. (Source: Web Search)

  2025-05-26

• A version of the 'No Tax on Tips Act' was included in the 'One Big Beautiful Bill Act' and signed into law. (Source: Wikipedia)

  2025-07-04

No tax on tips

No tax on tips is an American proposal to not tax income earned from tips. During the 2024 US presidential election campaign, both main candidates supported legislation to remove tax from tips. In May 20 2025, The United States Senate passed the bipartisan No Tax on Tips Act proposed bill by unanimous consent. A version of the bill was included in the One Big Beautiful Bill Act and signed into law on July 4, 2025.

Web Search Results

• Buchanan, Donalds Introduce No Tax on Tips Act with Cruz, Daines

  The _No Tax on Tips Act_ eliminates federal income tax on qualified tips through a deduction at filing. The maximum deduction allowed for any taxable year is $25,000, and highly compensated employees cannot claim the deduction. Further, the bill requires the Secretary of the Treasury to limit deduction to traditionally tipped occupations, such as waiters, hospitality workers and beauticians. [...] WASHINGTON — Today, Congressman Vern Buchanan, Vice Chairman of the House Ways and Means Committee, and Congressman Byron Donalds announced that they have introduced the _No Tax on Tips Act_ to exempt tips from federal income tax. The Senate companion bill was introduced by Sen. Ted Cruz, Chairman of the Senate Commerce Committee, and co-sponsored by Sen. Steve Daines, a member of the Senate Finance Committee. The bipartisan, bicameral bill allows taxpayers to claim a deduction at filing for [...] The _No Tax on Tips Act_ is co-sponsored by Reps. Steven Horsford and Derrick Van Orden in the House and Sens. Jacky Rosen, Catherine Cortez Masto and Pete Ricketts in the Senate.

• New 'No Tax on Tips' Bill Approved for 2025: What to Know Now

  However, the IRS taxes that money. If tips are part of your pay, the IRS treats every dollar you receive, whether left on the table in cash or added to a credit card receipt, as regular income. But some of that could soon change. In a surprising move, the U.S. Senate just passed the “No Tax on Tips Act,” by a vote of 100-0; no senator on either side of the political aisle objected. Subscribe to Kiplinger’s Personal Finance Be a smarter, better informed investor. [...] But...enter the No Tax on Tips Act. The bipartisan bill sponsored by Republican Sen.Ted Cruz of Texas passed the Senate by unanimous consent on May 20. The measure, which the Peterson Foundation estimates could cost $110 billion over ten years, has roots in Donald Trump’s 2024 presidential campaign. You may remember that Trump frequently promised to end federal taxes on tips and overtime pay. [...] When you file your tax return, your reported tips are included on your W-2 and added to your other income to determine how much you owe. Even if you get paid in literal cash, the IRS expects you to keep a record and report it. So, currently, tips aren’t treated any differently than your regular paycheck when it comes to taxes. No Tax on Tips Act unanimously passes the Senate

• S.129 - No Tax on Tips Act 119th Congress (2025-2026)

  No Tax on Tips Act This bill establishes a new tax deduction of up to $25,000 for tips, subject to limitations. The bill also expands the business tax credit for the portion of payroll taxes an employer pays on certain tips to include payroll taxes paid on tips received in connection with certain beauty services. [...] Under the bill, the new tax deduction for tips is limited to cash tips (1) received by an employee during the course of employment in an occupation that customarily receives tips, and (2) reported by the employee to the employer for purposes of withholding payroll taxes. (Under current law, an employee is required to report tips exceeding $20 per month to their employer.) [...] | Sponsor: | [Sen. Cruz, Ted [R-TX]]( (Introduced 01/16/2025) | | --- | | Committees: | Senate - Finance | | Latest Action: | House - 05/26/2025 Held at the desk.(All Actions) |

• "Big, beautiful bill" gives tipped workers a new tax break ... - CBS News

  The "no tax on tips" provision in the spending bill would create a new deduction for tipped workers, eliminating what they owe in federal income tax. Tipped workers would still have to pay state and local income tax and payroll taxes. The House and Senate versionsof the tax and spending bill vary on a few key points, including how much a worker could claim in deductions. The Senate proposal limits that deduction to $25,000, while the House version is uncapped.

• No Tax on Tips Provision Included in the House Ways and Means ...

  While the no tax on tips policy may provide significant tax savings to select tipped workers, the legislation may create challenges for restaurant owners and other businesses with workers designated by the Treasury Secretary to be a traditional tip-receiving occupation. As this policy begins to unfold, restaurant owners should be aware of and engage—at both the federal and state level—to try and shape these policies to address these issues. [...] No Tax on Tips Provision Included in the House Ways and Means Committee’s 2025 Tax Bill Share On May 14, the House Ways and Means Committee approved the Make American Families and Workers Thrive Again Act, which contains a no tax on tips provision. This Ways and Means Committee bill is the starting point in what may be an arduous journey through Capitol Hill, so the final version of no tax on tips may look different than this committee bill. Some no tax on tips highlights include: