Ted Cruz Secures Senate Victory for “No Tax on Tips” Act, Advancing Key Trump Agenda

Texas Senator Ted Cruz has delivered a significant legislative win for working Americans and former President Donald Trump with the Senate’s unanimous approval of the “No Tax on Tips Act.” The bill, which passed in a rare 100-0 bipartisan vote, marks a major step forward in removing federal income taxes from gratuities—a promise long championed by Trump on the campaign trail.

The legislation aims to provide financial relief to millions of American service industry workers who depend heavily on tips to support themselves and their families. These workers, often living paycheck-to-paycheck, could soon see a meaningful boost in take-home pay if the bill becomes law.

“A Promise Kept”

“President Trump made a commitment to eliminate taxes on tips,” Cruz said following the vote. “In Congress, I helped build a bipartisan, bicameral coalition to fulfill that promise. Today’s Senate passage of the No Tax on Tips Act is a victory for hard-working Americans.”

Cruz, who introduced the bill in the Senate alongside Democratic Senator Jackie Rosen of Nevada, emphasized the broader implications for working-class families. “This legislation protects the earnings of blue-collar workers who are the backbone of our economy. I urge the House to act quickly so President Trump can sign this into law.”

What the Bill Does

Under the current tax system, tips received by workers—whether in cash or added to credit or debit card payments—are treated as taxable income. The No Tax on Tips Act would allow qualifying workers to deduct the full amount of their reported tips from federal income taxes starting in 2025. The bill also provides clear definitions to ensure only legitimate tipped workers benefit.

To prevent abuse, the legislation includes safeguards. For example, only jobs that “customarily and regularly” received tips before December 31, 2024, will be eligible. Within 90 days of enactment, the U.S. Treasury Secretary must publish a list of qualifying occupations.

Income Limits and Caps

Differences between the Senate and House versions of the bill could still be ironed out as the proposal moves forward. The Senate’s version includes a cap of $25,000 per year on tip deductions. It also begins phasing out the benefit once an individual earns more than $150,000 annually—or $300,000 for married couples filing jointly. For every $1,000 over the threshold, the deduction is reduced by $100.

By contrast, the House version, passed earlier as part of a broader domestic policy bill, does not include a cap on deductions but phases them out entirely once income exceeds $160,000. Final language will need to be negotiated before a unified bill can be sent to the president.

Wider GOP Tax Strategy

The tipping proposal is just one part of a larger Republican-led tax reform initiative. Senate Republicans have aligned their efforts with Trump’s 2024 economic agenda, seeking to provide relief for middle-class Americans while stimulating job growth and consumer spending.

Cruz, a longtime advocate for tax reform, played a major role in crafting the 2017 Tax Cuts and Jobs Act and helped push through the USMCA trade agreement. He continues to advocate for making past tax cuts permanent and for passing legislation that empowers American workers.

Praise from Both Sides of the Aisle

Though pushed primarily by Republicans, the No Tax on Tips Act has received praise from top Democrats, including Senate Majority Leader Chuck Schumer and Senator Rosen. Both cited the bill as a meaningful step toward easing financial burdens on service industry workers in their states and nationwide.

“This is a win for workers in every state, from restaurant servers and hotel staff to hair stylists and rideshare drivers,” Rosen said in a statement. “We’ve listened to their stories, and now we’re delivering real relief.”

Next Stop: The House

With the Senate’s approval secured, the bill now moves to the House of Representatives, which is currently under Republican control. Lawmakers there are expected to prioritize the measure in upcoming sessions as part of their sweeping domestic policy overhaul.

If passed by the House and signed by President Trump, the No Tax on Tips Act would take effect in the 2025 tax year and run through at least 2028.

Final Word

While tax policy rarely unites lawmakers from both parties, the No Tax on Tips Act has proven to be a rare exception. For now, workers who depend on tips for their livelihood may have reason to be hopeful as the bill gains momentum in Washington.