OAN Staff James Meyers
8:07 AM – Wednesday, May 21, 2025
The U.S. Senate unanimously passed a bill on Tuesday that would eliminate taxes on tips of up to $25,000.
The Republican-led Senate passed the bill, which creates a tax deduction worth up to $25,000 for tips, limited to cash tips that workers report to employers for withholding purposes on payroll taxes. Additionally, the tax break would be restricted to employees who earn $160,000 or less per year.
The bill is also limited to cash tips received by occupations that are customarily tipped.
Advertisement
“Tipped occupations” consist of jobs like waiters, professionals in beauty service such as barbers, hair care, body and spa treatments, among other jobs.
The passing of the bill comes after President Donald Trump had repeatedly proposed the idea throughout his campaign leading up to the November election.
Senator Ted Cruz (R-Texas) has been spearheading the bill leading to an outcome considered rare for substantive legislation.
According to the Budget Lab by Yale University, there will be an estimated four million workers in tipped occupations this year.
The bill also mandates that tips must be reported by the employee to the employer for withholding payroll taxes.
The current law allows only tips that exceed $20 per month to be reported.
According to the report by Budget Lab, a non-tipped worker in 2023 was a minimum of 10 years older than the typical tipped worker.
The report also revealed that one-third of the number of employees that received tips were under the age of 25, with 13% being teenagers.
The new bill, if passed, will cost $110 billion in federal revenues over the next 10 years, according to the Peter G. Peterson Foundation.
Sen. Jacky Rosen, (D-Nev.), said during her floor speech that she agreed with President Trump’s campaign promise.
“I am not afraid to embrace a good idea, wherever it comes from. So I agreed we need to get this done,” she said.
“Nevadans, our families, are being squeezed, and we need real relief,” Rosen said in her floor remarks. “For some, many service and hospitality workers, tips aren’t extra, it’s part of their income that they use to make ends meet.”
The passing of the bill by the GOP led-Senate comes as Republicans look to advance a massive tax cut and spending package that will create a tax break on tips over the next four years.
Meanwhile, the next step is approval by the House of Representatives before it is signed into law.
Stay informed! Receive breaking news blasts directly to your inbox for free. Subscribe here. https://www.oann.com/alerts
