Senate Unanimously Passes No Tax on Tips Act

The U.S. Senate has unanimously passed the No Tax on Tips Act, which would exempt up to $25,000 in tips from federal income taxes for eligible workers earning less than $160,000 annually, including waiters, bartenders, delivery drivers, and beauty service workers. This bipartisan legislation, a key campaign promise of former President Donald Trump, aims to put more money into the pockets of millions of American service workers by revising the IRS code to eliminate income tax on tips. The American Hotel & Lodging Association praised the bill, highlighting its benefit to hotel workers who receive tips, such as housekeepers and valets. Some economists and commentators caution that the policy might not significantly help workers since tip reporting is often inconsistent and could lead to customers tipping less. Critics also note potential complexities, such as the possibility of employees misclassifying regular income as tips, though the legislation is seen as a politically savvy move to support tipped workers. The bill now moves to the Republican-controlled House, where it currently enjoys broad support.