Service industry workers just scored a massive victory as the Senate unanimously passed the “No Tax on Tips” bill, delivering on President Trump’s campaign promise to exempt gratuities from federal income tax up to $25,000 for qualifying workers.
Key Takeaways
- The Senate unanimously passed the bipartisan No Tax on Tips Act, which exempts tips from federal income tax for workers earning under $160,000 annually, with deductions capped at $25,000.
- The legislation fulfills a campaign promise made by President Trump during a stop in Las Vegas and was championed by Senators Ted Cruz (R-TX) and Jacky Rosen (D-NV).
- Nevada and other states with large service industry workforces stand to benefit significantly from this tax relief measure.
- Democrats successfully extracted the bill from a controversial House “megabill,” allowing it to advance as a standalone measure focused purely on worker relief.
- The bill now moves to the House of Representatives for final approval before it can be sent to President Trump’s desk for signature.
Trump Campaign Promise Becomes Reality in Senate
The U.S. Senate delivered a substantial victory for America’s service industry workers by unanimously passing the No Tax on Tips Act. This legislation, which exempts gratuities from federal income taxation up to $25,000 for employees earning less than $160,000 annually, represents a direct fulfillment of President Trump’s campaign pledge. The bipartisan measure, spearheaded by Senators Ted Cruz (R-TX) and Jacky Rosen (D-NV), provides targeted tax relief to millions of Americans who depend on tips for their livelihood, particularly in hospitality-heavy states like Nevada.
The bill’s passage marks a significant legislative achievement for the Trump administration, demonstrating the President’s ability to advance key economic policies despite challenges within Republican ranks on other aspects of his domestic agenda. By focusing specifically on tipped workers, the legislation addresses a longstanding inequity in the tax system while providing immediate financial relief to working-class Americans who often struggle with unpredictable income streams and rising living costs.
— Tom Emmer (@GOPMajorityWhip) May 20, 2025
Strategic Win for Both Parties
The unanimous consent approval in the Senate represents a strategically important win for both Republicans and Democrats. For Republicans, it delivers on a key Trump promise, showcasing the administration’s commitment to working-class tax relief. For Democrats, particularly Senator Rosen, it demonstrates bipartisanship on economic issues important to their constituencies. More significantly, Democrats succeeded in extracting this popular measure from a larger House Republican package that contained more controversial budget cuts to programs like Medicaid and SNAP food assistance.
“No tax on tips was one of President Trump’s key promises to the American people, which he unveiled in my state of Nevada. And, I am not afraid to embrace a good idea, wherever it comes from,” Senator Rosen said.
This strategic decoupling allows the tip tax exemption to advance on its own merits without being entangled in broader partisan budget disputes. Senator Rosen emphasized the importance of passing the bill as a standalone measure, stating firmly that service workers should not be forced to choose between healthcare and keeping their tips. Her approach highlights a rare moment of pragmatic cooperation in today’s divisive political landscape.
Nevada Workers Stand to Benefit Substantially
Nevada, with its tourism-driven economy and large hospitality sector, stands to be one of the primary beneficiaries of this legislation. The state’s vast population of service workers in Las Vegas, Reno, and other tourist destinations typically relies heavily on gratuities to supplement base wages that often hover near minimum wage. By eliminating federal taxation on these tips up to the $25,000 cap, the legislation effectively delivers an immediate pay increase without requiring employers to raise wages directly.
“If we are serious about providing service employees with financial relief, let’s do it now, let’s do it today!” Rosen urged her colleagues.
The income threshold of $160,000 ensures that the tax benefits are targeted toward working and middle-class Americans rather than high-income earners. This careful calibration reflects the Trump administration’s focus on delivering tax relief to ordinary Americans while maintaining fiscal responsibility. Senator Cruz has expressed confidence that the measure will become law, either as a standalone bill or as part of a larger package, solidifying this significant economic relief for service workers nationwide.
