In a surprising move on May 20, 2025, the U.S. Senate passed the "No Tax on Tips" Act with a unanimous vote, fulfilling a campaign promise by former President Donald Trump and receiving bipartisan support.
The "No Tax on Tips" Act, introduced by Senator Ted Cruz (R-TX) on January 16, 2025, seeks to exempt cash tips from federal income tax. The bill allows taxpayers to claim a 100% deduction for cash tips received during the taxable year, up to a maximum of $25,000. To qualify, the tips must be reported to the employer as required by law.
