Tax Relief Could Be on the Way for Servers as Senate Passes No Tax on Tips Act

Restaurant servers and other tipped employees could be in for a tax break if the U.S. House of Representatives follows the Senate’s lead on the No Tax on Tips Act.

The Senate approved the bipartisan legislation on Tuesday. It would deliver on a promise President Donald Trump made on the campaign trail last year to provide relief for tipped workers.

The legislation would create a tax deduction worth up to $25,000 for tips. The deduction would be restricted to cash tips that workers report to their employers for withholding purposes on payroll taxes. It’s limited to employees who earn $160,000 or less in 2025.

Sen. Ted Cruz (R-TX) introduced the bill in January with support from two Democratic co-sponsors, Sen. Jacky Rose and Sen. Catherine Cortez Masto. Rosen called for “unanimous consent” approval of the bill on Tuesday, and there were no objections, thus securing the bill’s passage in the Senate.

If the House passes the legislation, it would almost certainly be signed into law by President Trump.

“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, according to NBC News. “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.”

Many Americans are reportedly getting fed up with being prompted to tip providers of various services, from hair stylists and hotel housekeepers to baristas and restaurant counter workers who simply take orders. A 2024 survey from Bankrate found that 59% of Americans have a negative view of tipping, and 35% believe the tipping culture has gotten out of control.

At the same time, the Bankrate survey found that restaurant tipping was up in 2024. Sixty-seven percent of survey respondents said they always tip servers at sit-down restaurants, compared to 65% in 2023. Tipping for food delivery drivers was also up last year.

That same survey found that 37% believe businesses should pay their employees more rather than relying so much on tips. And 34% said they were annoyed by POS systems’ tip screens that suggest tipping amounts.

But only 14% said they’d be willing to pay higher prices if tipping was eliminated.

PMQ’s June-July 2025 issue will include a feature story on two pizza restaurants—Pizza by Ruffin in Seattle and Extra Extra Pizza in Buffalo—that have found success with a tip-free model.