US Senate passes ‘no tax on tips’ bill in unanimous vote

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"US Senate Approves Bipartisan No Tax on Tips Act"

US Senate passes ‘no tax on tips’ bill in unanimous vote analysis cover image The Guardian 7.4
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Original Article Source: https://www.theguardian.com/us-news/2025/may/21/senate-passes-no-tax-on-tips-bill
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TruthLens AI Summary

The US Senate recently passed the No Tax on Tips Act with unanimous support, following a request for consent by Senator Jacky Rosen from Nevada. This bipartisan legislation aims to create a tax deduction of up to $25,000 for cash tips that workers report to their employers for payroll tax purposes. The bill, introduced in January 2025 by Senator Ted Cruz along with Rosen and Senator Catherine Cortez Masto, seeks to alleviate the tax burden on tipped workers, with the stipulation that eligible workers must have an annual salary cap of $160,000. With no objections raised during the Senate proceedings, the bill now moves to the House for further consideration. Additionally, the legislation mandates the US Department of Treasury to compile a list of occupations that typically receive tips within 90 days after the bill's enactment, which could further clarify its intended beneficiaries.

While the passage of the No Tax on Tips Act has garnered support from both major political parties, it has also faced criticism from economists and labor advocates. Concerns have been raised that the legislation might promote the growth of tipped positions, potentially undermining wage increases for workers in those roles. Critics argue that the bill primarily benefits a small percentage of low-paid workers—approximately 5%—who receive tips, while a significant number of tipped workers already do not pay federal income tax due to their low earnings. Experts, including Lena Simet from Human Rights Watch, emphasize the need for a minimum wage floor to protect workers from exploitation and inequality, suggesting that eliminating sub-minimum wages would have a more meaningful impact on improving conditions for tipped workers. Overall, while the bill aims to support tipped workers, its effectiveness and implications for the labor market remain contentious topics among stakeholders in the ongoing debate over wage policies and workers' rights.

TruthLens AI Analysis

The article presents the recent passage of the "No Tax on Tips Act" by the US Senate, highlighting its bipartisan support and the implications for workers who rely on tips as part of their income. This legislative move aims to eliminate taxes on reported cash tips, which has sparked both support and criticism.

Political Context and Intentions

The bill's passage without objections emphasizes the bipartisan nature of this legislation, which is noteworthy in today's often polarized political climate. The support from both Republican and Democrat senators, including figures like Jacky Rosen and Ted Cruz, suggests a strategic effort to appeal to a wide range of constituents, particularly those working in industries where tipping is prevalent. This could be seen as a maneuver to gain favor with voters who depend on tips, especially leading into future elections.

Public Perception and Reactions

The article indicates that the bill has garnered support from various political figures, including Donald Trump and Kamala Harris. This bipartisan endorsement is likely intended to create a perception of unity and collective action on behalf of working-class individuals, potentially fostering a sense of optimism among workers who might benefit from the tax deduction. However, the criticism from economists and labor advocates raises questions about the effectiveness of the proposed changes, particularly regarding their potential to exacerbate income inequality rather than alleviate it.

Economic Implications

Critics of the bill argue that it may inadvertently encourage the expansion of tipped work without addressing the fundamental issues of wage disparities. The assertion that only a small percentage of low-paid workers would benefit from the tax deduction could undermine the bill's overall impact on labor rights and wages. The mention of the Brookings Institute's research highlights a significant concern: that many tipped workers already do not pay federal income tax due to low earnings, suggesting that the bill may not address the root causes of economic insecurity.

Connection to Broader Issues

The timing of the bill's introduction and passage aligns with ongoing discussions about wage reform and worker rights in the US. By addressing the taxation of tips, legislators may be attempting to sidestep more comprehensive reforms that could involve raising the minimum wage or eliminating sub-minimum wage laws for tipped workers. This creates a narrative that could distract from broader economic inequalities.

Potential for Manipulation

The article's framing of the bill as a "good idea" due to its bipartisan nature may serve to downplay the significant criticisms it faces. The language used is somewhat optimistic and does not fully engage with the potential drawbacks, which could be seen as a form of manipulation to garner public support without adequately addressing dissenting opinions.

In conclusion, while the article presents factual information regarding the bill's passage, it also suggests a concerted effort to shape public perception positively. The complexities surrounding economic inequality and labor rights are glossed over, potentially leading to a skewed understanding of the legislation's true implications.

Unanalyzed Article Content

Source URL: https://www.theguardian.com/us-news/2025/may/21/senate-passes-no-tax-on-tips-bill

The US Senatepassedthe No Tax on Tips Act on Tuesday after the Nevada senator Jacky Rosen brought the bill up for a unanimous consent request.

“This bipartisan bill is a good idea. It has support from Democrats and Republicans, so we should pass it, well, as soon as possible, without any poison pills,” said Rosen, a Democrat, on theSenate floor.

The bill was introduced in the Senate in January 2025 by Senator Ted Cruz and a bipartisan group of co-sponsors which included Rosen and the Nevada senator Catherine Cortez Masto.

No objections were made by Rosen’s request, resulting in the passage of the bill, which now goes to the House.

The bipartisanbillwill create a tax deduction of up to $25,000 for cash tips reported to employers by workers for withholding purposes on payroll taxes, with a cap on the salary for eligible workers at $160,000 annually.

The bill calls for the US Department of Treasury to issue a list of occupations that traditionally receive tips within 90 days of the bill’s enactment.

Ending taxes on tips gained traction during the 2024 presidential election, with Donald Trumptoutingthe plan on the campaign trail in Nevada, and Kamala Harris laterendorsingthe idea.

Economistsand labor advocates havecriticizedthe legislation, withconcernsit will incentivize the expansion of tipped work, undermine pay increases and would affect only a small segment of about 5% of low-paid workers who receive tips.

According to Brookings Institute researchers,37%of all tipped workers already pay no federal income tax because their earnings are so little, and eliminating sub-minimum wages for tipped workers would be more impactful.

“Without having these earnings floors in place, the minimum wage floor and calling for an increase, workers are vulnerable to exploitation and inequality in the labor market which is harmful overall for the economy,” Lena Simet, a senior researcher Human Rights Watch,toldthe Guardian in August 2024 on the push to end taxes on tips.

“It doesn’t mean that workers can no longer be tipped. It just means a tip comes on top of a wage floor that would guarantee them a minimum.”

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Source: The Guardian