No Tax on Tips Act Introduced in Congress

The No Tax on Tips Act, which aims to exempt tips from federal income tax, has been introduced by Congressman Vern Buchanan and Congressman Byron Donalds in the House, with support from Senator Ted Cruz in the Senate. This bipartisan bill allows eligible workers to deduct up to $25,000 in tips from their taxable income, targeting traditionally tipped occupations such as waiters and hospitality workers. Democratic Senator Jacky Rosen has also reintroduced a similar proposal in the Senate, highlighting the financial relief it could bring to service workers facing rising living costs. In Arizona, House Bill 2081 seeks to eliminate state income tax on cash tips retroactively from 2024, aligning with President-elect Trump's campaign promise to cut taxes on tips. Advocates argue that these measures will help boost the economy by allowing tipped workers to retain more of their hard-earned income. However, concerns remain regarding the potential revenue loss for the federal and state governments, with estimates suggesting significant impacts on federal revenues over the next decade.