Senate votes unanimously to end tax on tips
The Senate voted unanimously on Tuesday to eliminate federal taxes on tip income, with Democrats and Republicans united on the initiative that fulfills a campaign promise of President Donald Trump.
Sen. Jacky Rosen (D-NV) brought the bill up for a vote thinking that Sen. Ted Cruz (R-TX) would block it.
That did not happen, and the bill passed by unanimous consent.
"Great news"
“I just want to say: This is great news for Nevada,” Rosen said, adding that hospitality workers in her state are being “squeezed by rising costs.”
“This bill is not the be-all, end-all, but it’s going to offer immediate financial relief while the Senate continues to work to lower costs and find other avenues of relief for hardworking families,” she said.
It was in Nevada that Trump first said he supported ending taxes on tips. The state has more tipped workers than any other, Rosen said in her remarks.
Cruz said in support of the unanimous consent motion that around 25% of Nevada's workers rely on tips for the majority of their income.
For servers and waitstaff, the base pay is generally $2.13 per hour, but workers must make at least $7.50 per hour including tips or the employer must make up the difference.
"Close to 100%"
The bill has not yet passed the House, but it is expected to do so either as a standalone bill or as part of the huge reconciliation bill being pushed by Trump to make his first-term tax cuts permanent, which is making its way through committees before passage.
“Here’s the good news: With what we just saw now, the certainty that we will see no tax on tips become the law of the land, I think, is very close to 100 percent,” Cruz said. “One way or another, no tax on tips is going to become law.”
While the desire to give workers who rely on their tips for most of their salary a tax break, it puts these workers in a special class, even though they are not the least-paid workers out there.
Trump has also promised to end taxes on Social Security for seniors and those with lower incomes as part of his "big beautiful bill," so no taxes on tips is just one part of the tax relief planned.
It looks like pretty much a done deal, though, so we'll just have to chalk it up as a win for lower taxes overall.
Tax cuts are the main way Trump is going to stimulate the economy, so the more the merrier.