Senate Passes No Tax on Tips Act to End Federal Income Tax on Cash Tips

Senate Passes No Tax On Tips Act To End Federal Income Tax On Cash Tips

In a surprise twist that feels more Vegas than Washington, the U.S. Senate has passed the “No Tax on Tips Act”—a bold move to let service workers keep every single dollar of their cash tips, without Uncle Sam dipping in.

Yep. That $20 bill someone dropped for amazing service? All yours. No taxes. No forms. No BS.

Backed by Senator Ted Cruz and hyped by Donald Trump at his Vegas rally—because of course he did—the bill is now heading to the House, where Speaker Mike Johnson has already given it a thumbs-up.

Axios reported the bill passed on Tuesday with a bipartisan push (miracles do happen). The goal? Help the waiters, bartenders, hair stylists, and every other tip-hustling hero keep more of what they earn.

“This is real money in the pockets of working Americans,” said Cruz, who also warned the IRS to back off the bread baskets.

And here’s the kicker: you don’t even need to itemize deductions. Just report your base income, and those sweet, sweet tips? Exempt. Though to be clear—only from federal income tax. Social Security and Medicare still want their slice.

Some critics aren’t popping bottles yet. The Economic Policy Institute told Business Insider the policy might mostly help high earners at pricey spots, and there’s concern it could nudge employers to lowball wages.

Still, for now, it’s all smiles in service land. Think of it as the government leaving a fat tip—for once. Next stop: the House vote. If it passes, the change kicks in starting 2025. Pour one out for the tax man. He’s not getting a cut of your coffee shop hustle anymore.