WASHINGTON — In a surprise move, the Republican-led Senate quickly passed the “No Tax on Tips Act” on Tuesday, giving its official stamp of approval to an idea that has gained traction since President Donald Trump campaigned on it last year.
The legislation would create 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. The tax break would also be restricted to employees who earn $160,000 or less in 2025, an amount that will rise with inflation in coming years.
It was introduced in January by Sen. Ted Cruz, R-Texas, and a bipartisan group of co-sponsors including Nevada’s two Democratic senators, Jacky Rosen and Catherine Cortez Masto.
Rosen brought the bill up in the Senate for a “unanimous consent” request Tuesday, which means any senator can block it. The process is typically used for more mundane matters, and bills are routinely called up and thwarted by objections. Consequential tax bills usually follow a more complex process. But none of the 99 other senators objected to Rosen’s proposition, which led to the legislation’s passing.
“Nevada has more tipped workers per capita than any other state. So this bill would mean immediate financial relief for countless hard-working families,” Rosen said. “‘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.”
The bill now goes to the House, where Republicans have been seeking to include a version of the proposal in their sweeping party-line package for Trump’s agenda. But the broad Democratic support for the idea gives GOP leaders options, including the possibility of passing it separately and removing it from broader legislation to lower the cost or spend the money elsewhere.
“Whether it passes free-standing or as part of the bigger bill, one way or another, ‘No Tax on Tips’ is going to become law and give real relief to hard-working Americans,” Cruz said on the floor. “So I’m proud of what the Senate just did, and I commend Democrats and Republicans, even at a time of partisan division, coming together and agreeing on this commonsense policy.”
Senate Minority Leader Chuck Schumer, D-N.Y., also celebrated passage of the legislation, crediting Rosen.
“Working Americans — from servers, to bartenders, delivery drivers, and everything in between — work hard for every dollar they earn and are the ones who deserve tax relief, not the ultra-rich,” Schumer said in a statement. “While President Trump and Republicans push tax breaks for billionaires and stick the middle class with the bill, Senate Democrats are standing strong to protect America’s working families.”
This article was originally published on NBCNews.com
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