Senate Unites to Pass “No Tax on Tips” Bill in Surprise Move

Summary:

• The U.S. Senate unanimously passed a bill that would exempt tips from federal taxes.
• Originally proposed by Sen. Cruz and backed by Sen. Rosen, capping deductions at $25k.
• Democrats support the idea but oppose its inclusion in a larger GOP budget package with social program cuts.

In a rare moment of bipartisan agreement, the U.S. Senate passed a bill on Tuesday to eliminate federal taxes on tips.

The idea, first floated by Donald Trump during a campaign stop in Las Vegas, saw the green light through an unexpected procedural move that did not require formal voting.

Rosen: “Not Afraid to Embrace a Good Idea”

Senator Jacky Rosen (D-NV) introduced bill H.R.482 to the Senate floor, requesting its passage via unanimous consent. The method only works if all 100 senators agree and is typically reserved for routine matters and symbolic resolutions, not major policy changes.

Surprisingly, no one objected. The measure, originating from Senator Ted Cruz (R-TX) and co-sponsored by Rosen and her fellow Nevada Democrat, Sen. Catherine Cortez Masto, mirrors a similar proposal included in House Republicans’ broader tax and spending plan.

While Rosen supports the no-tax-on-tips policy, she and other Democrats oppose the House bill because it also includes deep cuts to social programs like Medicaid and SNAP.

Rosen said on the Senate floor.

We shouldn’t be forcing working families to choose between keeping their health care and keeping their tips — which is why we want this bipartisan bill to pass on its own, not [as] part of a harmful, extreme budget bill

Both Rosen and Cruz addressed the chamber in support of the standalone bill, with Rosen adding she’s “not afraid to embrace a good idea”, even if it came from Trump.

The Waitress Talk

According to President Trump, the proposal came from a conversation he had with a waitress at his Las Vegas hotel. The plan quickly gained support in Nevada, a state with the nation’s highest percentage of tipped workers.

Cruz was visibly enthusiastic about the bill’s smooth passage, calling it a rare legislative feat.

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. Whether it passes freestanding 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.

The Senate version caps the tax deduction at $25,000 annually and makes the change permanent. The House plan has no cap and expires after 2028.

While a full cost estimate for the Senate version isn’t yet available, the House’s temporary proposal is projected to cost $40 billion over four years.

Rosen celebrated the win for her state, calling it “great news for Nevada”.