WASHINGTON – Senator Ted Cruz (R-Texas) announced the reintroduction of a bipartisan bill on Thursday aimed at eliminating income taxes on tipped wages. The proposed legislation, known as the “No Tax on Tips Act,” seeks to provide financial relief to workers in tipped industries by allowing a full deduction for tip income.

Key Provisions of the Bill

The bill would enable workers to claim a 100% deduction on tips earned through cash, credit card payments, and checks. It includes the following stipulations:

• Cap on deductions: Workers could deduct up to $25,000 annually in tipped income.
• Income threshold: Individuals earning more than $150,000 per year would not qualify.
• Eligibility criteria: The Secretary of the Treasury would be required to publish a list of traditionally tipped occupations eligible for the deduction.

A companion bill has also been introduced in the House of Representatives.

Bipartisan Support

Senator Cruz is joined by a group of co-sponsors, including Sens. Steve Daines (R-Mont.), Pete Ricketts (R-Neb.), Kevin Cramer (R-N.D.), Catherine Cortez Masto (D-Nev.), and Jacky Rosen (D-Nev.). The bill marks a rare instance of bipartisan cooperation, with support from both Republican and Democratic lawmakers.

Statements from Lawmakers

Cruz underscored the significance of the bill for American workers, particularly those in the service industry.

“American workers in many industries rely on tipped wages to make ends meet,” Cruz stated. “Today, I’m introducing my bipartisan No Tax on Tips Act—legislation I authored to fulfill President Trump’s promise to end the wrongful practice of taxing voluntary tips. This pro-worker bill is a critical step toward addressing the economic challenges faced by hardworking Americans in the face of inflationary pressures caused by the Biden administration’s policies.”

Senator Jacky Rosen emphasized the bill as part of a broader agenda to support service and hospitality workers in Nevada, a state heavily reliant on these industries.

“This legislation is just one step in our effort to support Nevada’s service workers,” Rosen said. “I’ll also continue advocating for measures to raise the minimum wage, eliminate the subminimum wage for service employees, lower costs, and cut taxes for hardworking Nevadans.”

Background

Cruz originally introduced the bill in June 2022 following a rally with former President Donald Trump, where the idea of eliminating taxes on tips was first proposed. However, the previous version lacked bipartisan backing and did not proceed to a vote.

Supporters of the bill argue it would provide significant financial relief for workers in tipped industries, which include food service, hospitality, and beauty services—sectors that collectively comprise approximately 40% of the U.S. workforce.

Concerns and Criticisms

Despite its potential benefits, critics have raised concerns about the bill’s fiscal implications, warning that reduced tax revenue could contribute to a growing federal deficit.

As the bill progresses through Congress, its reception and potential impact on both workers and the federal budget remain key points of debate.