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Senate unanimously passes No Tax on Tips Act

The Republican-led U.S. Senate passed the No Tax on Tips Act in an unexpected unanimous decision Tuesday afternoon.

The bill, which eliminates federal tax on tips for hospitality workers and servers, passed via unanimous consent after Democratic Nevada Sen. Jacky Rosen brought it to the floor and no other senator blocked it.

“I just want to say: This is great news for Nevada,” Rosen said. “This bill is not the be-all, end-all, but it’s going to offer immediate financial relief while the Senate continues to work to lower costs and find other avenues of relief for hardworking families.”

The senator added that Nevada had the largest percentage of tipped workers of any state in the nation.

“Nevadans, our families, are being squeezed, and we need real relief,” Rosen said. “For some, many service and hospitality workers, tips aren’t extra, it’s part of their income that they use to make ends meet.”

If approved by the House, the legislation will create a new tax deduction of up to $25,000 for tips, though it’s limited to cash tips workers report to their employers for withholding purposes on payroll taxes. It’s only available to workers who make $160,000 or less in 2025, but that amount will rise in the future to account for inflation.

“Here’s the good news: With what we just saw now, the certainty that we will see no tax on tips become the law of the land, I think, is very close to 100%,” said Republican Texas Sen. Ted Cruz. “One way or another, no tax on tips is going to become law.”

The idea was a campaign promise from President Donald Trump that he debuted at a stop in Nevada last year. It’s unclear whether the Senate will take up Trump’s similar pledge regarding taxes on overtime. Both tax cuts are a part of an upcoming GOP spending bill.

“Working Americans — from servers, to bartenders, delivery drivers, and everything in between — work hard for every dollar they earn and are the ones who deserve tax relief, not the ultra-rich,” Senate Minority Leader Chuck Schumer said in a statement. “While President Trump and Republicans push tax breaks for billionaires and stick the middle class with the bill, Senate Democrats are standing strong to protect America’s working families.”

Speaker Mike Johnson, R-La., plans to vote on the wider spending bill in the House this week.

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