The Senate has passed a bill aimed at removing federal taxes on tips, marking a key victory for President Donald Trump and his administration’s agenda.
What Happened: The Senate approved a bill on Tuesday that aims to remove federal taxes on tips, as reported by The Hill. This legislative move, supported by Democrats, fulfills a key campaign promise of President Trump.
Sen. Jacky Rosen (D-Nev.) introduced the bill, expecting opposition. However, Sen. Ted Cruz (R-Texas) did not block it, allowing it to pass through unanimous consent. Rosen highlighted the significance of this bill for Nevada, emphasizing the financial relief it offers to hospitality and service workers facing rising costs.
Cruz praised Trump’s “political genius” in removing taxes on tips.
Trump initially proposed the idea during a campaign stop in Nevada, a state with a high number of tipped workers. Cruz acknowledged the efforts of Nevada senators Rosen and Catherine Cortez Masto (D-Nev.), noting that about 25% of Nevada’s workforce depends on tips.
The bill, known as the No Tax on Tips Act, will now proceed to the House, where it is anticipated to pass one way or another either as another legislation advanced on Monday. Cruz expressed confidence that the bill will soon become law, offering a new tax deduction of up to $25,000 for tips.
Why It Matters: On Monday, a broader legislative package, dubbed by Trump as “One, Big Beautiful Bill, advanced in the congress. That bill seeks to extend The Tax Cuts and Jobs Act (TCJA) of 2017 and eliminate federal taxes on tips and overtime pay.
While the tax exemption on tips is seen as a boon for service workers, it could have significant fiscal implications. A report by the Committee for a Responsible Federal Budget (CRFB) suggests that the tax-free tips proposal might increase the federal deficit by up to $250 billion over the next decade.
This potential deficit increase is comparable to the projected revenue loss from the extension of the 2017 tax cuts for small businesses and pass-through companies, which are set to expire soon. The proposal is also viewed as a strategic move to garner support from younger voters, particularly in states like Nevada, where a significant portion of the workforce relies on tips.
Photo Courtesy: MargJohnsonVA on Shutterstock.com
Check This Out:
This story was generated using Benzinga Neuro and edited by Shivdeep Dhaliwal
