Sen. Cruz, Colleagues Introduce No Tax on Tips Act

U.S. Sen. Ted Cruz (R-Texas) today introduced legislation to exempt tips from being subject to taxation under the federal income tax, the No Tax on Tips Act. The bill is co-sponsored by Sens. Steve Daines (R-Mont.), Rick Scott (R-Fla.), and Sen. Cramer (R-N.D.), and has the support of industry groups including the National Restaurant Association.

Upon introduction, Sen. Cruz said, “American workers in dozens of industries depend on tipped wages to support themselves. Today, I am introducing pro-worker legislation, the No Tax on Tips Act, to ensure they get to keep all of those tips. This legislation is a common-sense pro-worker bill that will help families deal with the historic inflation caused by the Biden administration.”

Sen. Daines said, “Joe Biden’s sky-high inflation has hit hardworking Americans especially hard. Providing a much-needed tax cut for working families will help offset Biden’s high prices and get people back in the workforce.”

Sen. Cramer said, “President Trump is right: tips are earned by providing good service. It is simpler and more fair to let these workers keep the reward they earned rather than send it to D.C. bureaucrats. I am pleased to join Senator Cruz as a co-sponsor of the No Tax on Tips Act.”

Sen. Rick Scott said, “Under Biden’s administration, families are struggling to make ends meet with 20% inflation and policies that make their lives harder. We need to take action now to lower costs for hardworking Americans and get our economy back on track. During my time as Governor of Florida, we cut taxes over 100 times to help businesses thrive and families keep more of their hard earned dollars. It’s time we do that on the federal level with our No Tax on Tips Act.”

Sean Kennedy, Executive Vice President of Public Affairs, National Restaurant Association said, “Tipped employees are a critical part of the restaurant industry, and anything that strengthens their economic condition is a positive for them. The ‘No Tax on Tips Act’ would provide immediate tax relief for more than 2.2 million restaurant employees and their families, putting more money in their pockets at a time when we're all feeling the squeeze of higher prices. We thank Senator Ted Cruz and Senator Steve Daines for their leadership, and look forward to working with them on this and other common-sense tax proposals that will support restaurant vitality in every community in America.”

Myra Reddy, Director of Government Affairs, Professional Beauty Association (PBA) said, “We thank Senator Ted Cruz, Senator Rick Scott, Senator Kevin Cramer and colleagues as well as their staff for recognizing professionals working in beauty and barber shops. As the second highest tipped industry following restaurants, we appreciate being included in the swift actions the Senators are taking to provide relief for 1.3 million licensed beauty professionals across the United States. We look forward to working together to make this legislation a reality for our hard-working main street industry."

Emily Williams Knight, President and CEO, Texas Restaurant Association (TRA) said, “The Texas Restaurant Association is grateful to Sen. Cruz for working with us to develop the ‘No Tax on Tips Act.’ Restaurant servers, bartenders, and other tip-earning employees give so much to the local businesses and communities they serve—delivering the essential service of food with hospitality that creates lasting memories. It’s wonderful to create an opportunity to give back to them by helping them keep more of their hard-earned tips that they can invest in their families and our local economy.”

Read the bill text here.

BACKGROUND:

The bill exempts “cash tips” – cash, credit and debit card charges, and checks – from federal income tax by allowing taxpayers to claim a 100% above-the-line deduction at filing for tipped wages.