Senate Unanimously Passes No Tax on Tips Act, Delivering Major Tax Relief for Service Workers

In a surprise unanimous vote, the US Senate approved the No Tax on Tips Act (Bill S. 129), introduced by Senator Ted Cruz (R-Texas) and co-sponsored by Senator Jacky Rosen (D-Nevada).

The legislation amends the Internal Revenue Code to exempt up to $25,000 per year in cash, card, and check tips from federal income tax for occupations that traditionally earned tips before December 31, 2023.

Eligible workers earning under $160,000 annually—adjusted for inflation—must still report tips for payroll withholding, and the Treasury Secretary will publish a list of qualifying roles within 90 days.

The bill also expands employer tax credits on payroll taxes for beauty and spa services. Next, the House will review and vote on the measure before it heads to the President’s desk.