Here’s what voters need to know.
One of President Donald Trump’s boldest promises from the 2024 campaign—ending federal income taxes on tips—is finally gaining traction in Congress. And for the millions of hardworking Americans in the service industry, that means real money back in their pockets.
A Common-Sense Tax Cut for the Middle Class
While Washington elites drag their feet on real reform, President Trump is delivering. His pledge to make tips tax-free—first announced in Las Vegas, the beating heart of America’s service economy—struck a chord with working-class voters across the country. So much so that even Kamala Harris scrambled to copy the idea on the campaign trail.
Now, just five months into Trump’s second term, the wheels are turning. As part of the One Big Beautiful Bill Act, House Republicans have proposed a federal tax deduction on tips up to $160,000—while still preserving payroll taxes that fund Social Security and Medicare. In short, it’s a tax cut that doesn’t sacrifice seniors’ benefits.
Ted Cruz Leads the Charge With Standalone Relief Bill
In parallel, Senator Ted Cruz is pushing the No Tax on Tips Act, a bill that would allow tip earners to deduct up to $25,000 from their federal income, helping those who need it most—servers, bartenders, and frontline hospitality staff.
“This bill is about fairness,” Cruz said. “It gives relief to working Americans who are being taxed twice—once by inflation and again by the IRS.”
The Senate passed the bill in May with strong bipartisan support, signaling that the days of taxing gratuities may soon be over.
Americans Overwhelmingly Support the Plan
A poll conducted in July 2024 found that 67% of Americans support eliminating federal taxes on tips. The numbers are clear: everyday Americans are tired of government overreach and want pro-worker, pro-growth reforms.
Even so, some business voices are raising concerns about “tipping fatigue.” According to Javier Palomarez, CEO of the U.S. Hispanic Business Council, modern consumers are frustrated with endless tip prompts at coffee shops and self-checkout kiosks.
A BankRate survey found that:
- 41% of Americans say tipping has gotten out of control
- 38% dislike automated tip suggestions
But those criticisms miss the point.
Targeted Relief for the Right People
“This isn’t about tipping on a muffin at a gas station,” said Joseph Camberato, CEO of NationalBusinessCapital.com. “This is about 1.8 million Americans who rely on tips to pay rent, buy groceries, and support their families. These workers get taxed 15 to 20 percent on their tips. This policy is a 15 to 20 percent raise overnight.”
Mark Luscombe, a tax expert from Wolters Kluwer, added that while there may be perception issues, the real economic boost for service workers far outweighs any temporary concerns.
And the numbers back that up. The Urban-Brookings Tax Policy Center estimates that middle-income households could save up to $1,800 annually under this reform. That’s real money in a time of soaring inflation and skyrocketing prices under years of failed Democrat policies.
A Win for Workers, A Blow to Bureaucracy
President Trump’s plan reflects true conservative values: rewarding hard work, reducing government interference, and putting more money back in the hands of the American people—not in the pockets of Washington bureaucrats.
This isn’t about politics. It’s about respecting the value of labor and delivering real tax relief for the forgotten men and women who keep our restaurants, hotels, and small businesses running.
Whether passed as part of Trump’s sweeping economic plan or as a standalone bill, “No Tax on Tips” is the kind of bold, America-first reform our country needs—and it’s a clear sign that common-sense leadership is back in the White House.