Bill · S. 129· Senate(119-S-129)
No Tax on Tips Act
- Introduced
- 1/16/2025
- Last activity
- 5/26/2025 — Held at the desk.
- Sponsored by
- Ted Cruz
- Cosponsors
- - 6 - 2
- Introduced
- Passed Senate
- Awaiting House
What this bill would do
The "No Tax on Tips Act" aims to amend the Internal Revenue Code of 1986 to remove income tax on qualified tips. It establishes a deduction for individual taxpayers for tips received in occupations that traditionally received them before December 31, 2023. This deduction is capped at $25,000 per taxable year. The bill also extends a credit for employer Social Security taxes to include beauty service establishments. These changes are set to apply to taxable years beginning after December 31, 2024.
Yes· 3 of 9
Would households on low incomes be better off under this?+5
The bill provides a significant tax deduction for workers in service industries who are often in lower income brackets.
Does this cut taxes for middle-income families?+5
The bill creates a deduction for qualified tips up to $25,000, which reduces the income tax burden for many middle-income service workers.
Would middle-income households be better off under this?+4
The $25,000 deduction offers substantial tax relief for many middle-income service professionals.
The opposite
Does this reduce what the federal government spends?-2
The reduction in tax revenue from the new tip deduction may increase the federal deficit.
Who it would affect, and how
Potential Positive Impacts for People
-
Tax Relief for Tip Earners: Individuals working in occupations that traditionally receive tips can claim a deduction for their qualified tips, which helps eliminate the application of income tax on those earnings (Section 2(a)(1)).
-
Accessibility for All Taxpayers: The deduction is specifically allowed for non-itemizers, ensuring a wider range of people can benefit from the tax reduction (Section 2(b)).
-
Benefit for Beauty Service Workers: The bill extends a credit for employer Social Security taxes to include beauty services, such as barbering, hair care, nail care, esthetics, and body or spa treatments (Section 3(a)).
Potential Negative Impacts for People
-
Income Limits on Deductions: The deduction for qualified tips is limited to a maximum of $25,000 per taxpayer per year (Section 2(a)(2)).
-
Restrictions Based on Previous Compensation: The deduction cannot be claimed by individuals who had compensation from their employer in the preceding taxable year that exceeded a specific amount set under section 414(q)(1)(B)(i) (Section 2(a)(2)).
-
Occupation Restrictions: Only certain occupations are eligible, specifically those the Secretary of the Treasury identifies as traditionally and customarily receiving tips on or before December 31, 2023 (Section 2(a)(2)).
Groups and Interests Ranking
Every group the model scored this bill for, from -10 to +10. Hover a score for the reason it gave.
- Demographic And Interest Groups
- Good For Low Income Households+5Good For Middle Class Households+4Good For Business Owners+3Good For Hispanic Americans+2Good For Women+2
- Economy And Finance
- Reduces Middle Class Taxes+5Reduces Small Business Taxes+3Improves Economic Growth+2Reduces Government Spending-2
- Social Issues And Justice
- Improves Poverty Reduction+3
- 5/26/2025
- Held at the desk.
- Received in the House.
- 5/23/2025
- Message on Senate action sent to the House.
- 5/20/2025
- Senate Committee on Finance discharged by Unanimous Consent.
- Passed/agreed to in Senate: Passed Senate without amendment by Unanimous Consent.
- Passed Senate without amendment by Unanimous Consent. (consideration: CR S2993-2995; text: CR S2993-2994)
- 1/27/2025
- 1 Cosponsor added.
- 1/16/2025
- Read twice and referred to the Committee on Finance.
- 7 Cosponsors added.
- Introduced in Senate
One bill Congress.gov lists as related to this one — companions in the other chamber, earlier versions, and bills this one absorbed or was folded into.
Kevin CramerRepublican · North Dakota
Catherine Cortez MastoDemocrat · Nevada
Steve DainesRepublican · Montana
Josh HawleyRepublican · Missouri
Roger MarshallRepublican · Kansas
Jacky RosenDemocrat · Nevada
Pete RickettsRepublican · Nebraska
Rick ScottRepublican · Florida