[Pages S2993-S2995]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

NO TAX ON TIPS ACT

Ms. ROSEN. Madam President, hard-working families in Nevada and all
across this country are struggling to make ends meet because of rising
costs on everything, from groceries to housing, all of which has been
made worse by Donald Trump's tariffs that are driving prices even
higher.
Nevadans, our families, we are being squeezed, and they need real
relief. They need us to work together to lower costs for them. That is
why I introduced the No Tax on Tips Act alongside Senator Ted Cruz from
Texas, which would eliminate Federal income taxes on tipped wages.
For so many service and hospitality workers, tips aren't extra; it is
part of their income that they use to make ends meet. Tips are how
Nevadans pay their rent, cover their groceries, take care of their
families, their kids.
And Nevada has more tipped workers per capita than any other State.
So this bill would mean immediate financial relief for countless hard-
working families.
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. So I agreed we
need to get this done.
This is not a time for politics. It is a time for progress for hard-
working Americans. This bipartisan bill is a good idea that has support
from Democrats and Republicans. So we should pass it as soon as
possible without any poison pills.
The problem is that the House Republicans have included a version of
the No Tax on Tips Act in their bigger budget bill--a bill that cuts
Medicaid, SNAP, and other programs families rely on, to give more tax
breaks for billionaires and the ultrawealthy.
So we shouldn't be forcing working families to choose between keeping
their healthcare or keeping their tips, which is why we want this
bipartisan bill to pass on its own--on its own--not part of a harmful,
extreme budget bill.
If we are serious about providing service employees with financial
relief, let's do it now. Let's do it today because the American people,
they get sick and tired of Washington games.
So let's pass this bill without playing politics, without taking away
healthcare and food assistance from families who need it the most.
Let's pass it by itself.
That is why I am calling on the Senate to pass the bipartisan No Tax
on Tips Act right here, right now, as a stand-alone bill. We are going
to cut taxes for real hard-working Americans, for Nevadans, for
everyone, not just for billionaires. We are going to cut taxes on
service workers' tips without cutting Medicaid or SNAP. And let's get
this done with strong guardrails so CEOs and the ultrawealthy don't
exploit loopholes meant to help working people. Let's pass it today.
Nevadans sent me here to fight for them, and so I am going to keep
working to lower costs, to raise wages, and to make sure people who
power our economy--our working families--can keep more of what they
earn. And through this bipartisan bill, it shows that I am not going to
allow Washington gridlock and partisanship to block a bill without a
fight. That is why we are going to pass it today, taking matters into
my own hands, with the support of my colleagues on both sides of the
aisle, to pass our bipartisan No Tax on Tips Act by unanimous consent.
And so, notwithstanding rule XXII, I ask unanimous consent that the
Committee on Finance be discharged from further consideration of S. 129
and the Senate proceed to its immediate consideration.
The PRESIDING OFFICER. The clerk will report the bill by title.
The senior assistant legislative clerk read as follows:

A bill (S. 129) to amend the Internal Revenue Code of 1986
to eliminate the application of the income tax on qualified
tips through a deduction allowed to all individual taxpayers,
and for other purposes.

There being no objection, the committee was discharged, and the
Senate proceeded to consider the bill.
Ms. ROSEN. Madam President, I further ask that the bill be considered
read a third time and passed and that the motion to reconsider be
considered made and laid upon the table with no intervening action or
debate.
The PRESIDING OFFICER. Without objection, it is so ordered.
The bill (S. 129) was ordered to be engrossed for a third reading,
was read the third time, and passed as follows:

S. 129

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ``No Tax on Tips Act''.

SEC. 2. DEDUCTION FOR QUALIFIED TIPS.

(a) In General.--
(1) Deduction allowed.--Part VII of subchapter B of chapter
1 of the Internal Revenue Code of 1986 is amended by
redesignating section 224 as section 225 and by inserting
after section 223 the following new section:

``SEC. 224. QUALIFIED TIPS.

``(a) In General.--There shall be allowed as a deduction an
amount equal to the qualified tips received during the
taxable year that are included on statements furnished to the
employer pursuant to section 6053(a).
``(b) Maximum Deduction.--The deduction allowed by
subsection (a) for any taxpayer for the taxable year shall
not exceed $25,000.
``(c) Qualified Tips.--For purposes of this section--
``(1) In general.--The term `qualified tip' means any cash
tip received by an individual in the course of such
individual's employment in an occupation which traditionally
and customarily received tips on or before December 31, 2023,
as provided by the Secretary.
``(2) Exclusion for certain employees.--Such term shall not
include any amount received by an individual in the course of
employment by an employer if such individual had, for the
preceding taxable year, compensation (within the meaning of
section

[[Page S2994]]

414(q))(4) from such employer in excess of the amount in
effect under section 414(q)(1)(B)(i).''.
(2) Published list of occupations traditionally receiving
tips.--Not later than 90 days after the date of the enactment
of this Act, the Secretary of the Treasury (or the
Secretary's delegate) shall publish a list of occupations
which traditionally and customarily received tips on or
before December 31, 2023, for purposes of section 224(c)(1)
of the Internal Revenue Code of 1986 (as added by paragraph
(1)).
(3) Conforming amendment.--The table of sections for part
VII of subchapter B of chapter 1 of such Code is amended by
redesignating the item relating to section 224 as relating to
section 225 and by inserting after the item relating to
section 223 the following new item:

``Sec. 224. Qualified tips.''.
(b) Deduction Allowed to Non-Itemizers.--Section 63(b) of
the Internal Revenue Code of 1986 is amended by striking
``and'' at the end of paragraph (3), by striking the period
at the end of paragraph (4) and inserting ``and'', and by
adding at the end the following new paragraph:
``(5) the deduction provided in section 224.''.
(c) Non-Application of Certain Limitations for Itemizers.--
(1) Deduction not treated as a miscellaneous itemized
deduction.--Section 67(b) of the Internal Revenue Code of
1986 is amended by striking ``and'' at the end of paragraph
(11), by striking the period at the end of paragraph (12) and
inserting ``, and'', and by adding at the end the following
new paragraph:
``(13) the deduction under section 224 (relating to
qualified tips).''.
(2) Deduction not taken into account under overall
limitation.--Section 68(c) of the Internal Revenue Code of
1986 is amended by striking ``and'' at the end of paragraph
(2), by striking the period at the end of paragraph (3) and
inserting ``, and'', and by adding at the end the following
new paragraph:
``(4) the deduction under section 224 (relating to
qualified tips).''.
(d) Withholding.--The Secretary of the Treasury (or the
Secretary's delegate) shall modify the tables and procedures
prescribed under section 3402(a) of the Internal Revenue Code
of 1986 to take into account the deduction allowed under
section 224 of such Code (as added by this Act).
(e) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2024.

SEC. 3. EXTENSION OF CREDIT FOR PORTION OF EMPLOYER SOCIAL
SECURITY TAXES PAID WITH RESPECT TO EMPLOYEE
TIPS TO BEAUTY SERVICE ESTABLISHMENTS.

(a) Extension of Tip Credit to Beauty Service Business.--
(1) In general.--Section 45B(b)(2) of the Internal Revenue
Code of 1986 is amended to read as follows:
``(2) Application only to certain lines of business.--In
applying paragraph (1) there shall be taken into account only
tips received from customers or clients in connection with
the following services:
``(A) The providing, delivering, or serving of food or
beverages for consumption, if the tipping of employees
delivering or serving food or beverages by customers is
customary.
``(B) The providing of beauty services to a customer or
client if the tipping of employees providing such services is
customary.''.
(2) Beauty service defined.--Section 45B of such Code is
amended by adding at the end the following new subsection:
``(e) Beauty Service.--For purposes of this section, the
term `beauty service' means any of the following:
``(1) Barbering and hair care.
``(2) Nail care.
``(3) Esthetics.
``(4) Body and spa treatments.''.
(b) Credit Determined With Respect to Minimum Wage in
Effect.--Section 45B(b)(1)(B) of the Internal Revenue Code of
1986 is amended--
(1) by striking ``as in effect on January 1, 2007, and'';
and
(2) by inserting ``, and in the case of food or beverage
establishments, as in effect on January 1, 2007'' after
``without regard to section 3(m) of such Act''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2024.
Ms. ROSEN. Madam President, before I yield my time to the Senator
from Texas, I just want to say this is great news for Nevada. Our bill
just passed. Our hospitality and service staff are working harder than
ever while being squeezed by rising costs. This bill is not the be-all
and end-all, but it is going to offer immediate financial relief while
the Senate continues to work to lower costs and find other avenues of
relief for hard-working families.
Madam President, I yield the floor.
The PRESIDING OFFICER. The Senator from Texas.
Mr. CRUZ. Madam President, I remember, as a kid in Sunday school,
thinking what it would have been like to live in Israel in the age of
the apostles, in the time of miracles. And yet, perhaps we have been
transformed to another time of miracles.
Yesterday, I was at the White House, where President Trump signed
into law bipartisan legislation--my legislation--the TAKE IT DOWN Act,
which I authored with Senator Amy Klobuchar to protect women, to
protect teenage girls, to protect young people online from
nonconsensual intimate images.
We saw both parties come together and pass landmark legislation, and
just a moment ago, 24 hours later, we saw the same thing happen.
So I thank my colleague from Nevada for moving for this to pass by
unanimous consent. And I want everyone to reflect on what you just saw
happen because it is consequential.
Last year, in the midst of the Presidential campaign, President
Trump, at a rally in Las Vegas, announced his policy proposal of no tax
on tips. And the Presiding Officer will recall that, the week after he
announced that, he came and had lunch with the Republican Senators, and
he told us the backstory of where the idea came from.
He said he was sitting at a hotel in Las Vegas, getting ready to go
to his rally, and he said he was having lunch there. And he said a
waitress came by, and he said: She was beautiful; she was beautiful--
which I believe him. And he said she was complaining about the burden
and the paperwork of paying taxes on tips and how challenging it was.
And he said he pulled out a pad of paper, and he just wrote on the
pad of paper: No tax on tips.
He said: What do you think of this?
And she said: Great.
And he went to the rally, and he announced it. And as he told us, the
entire crowd went nuts.
Now, I have to say, when he announced that policy, I thought that was
policy genius. The next week, I drafted legislation to implement no
taxes on tips, and I introduced it in the Senate the very next week.
And within days, both Senators from Nevada joined my bill as
cosponsors.
As the Senator from Nevada just described, she told me on the floor--
she said 25 percent of all workers in the State of Nevada are tipped
workers. And this is commonsense, bipartisan tax reform.
Look, I think we ought to be fighting for waiters and waitresses. We
ought to be fighting for bartenders, taxicab drivers, Uber drivers. We
ought to be fighting for beauticians and nail salon workers. We ought
to be fighting for all the men and women who are working and working
hard. We ought to be fighting for casino workers. Sorry to leave them
out. As a longtime poker player, I certainly don't want to leave them
out. But we ought to be fighting for blue-collar workers across this
country.
And I will say, I have been urging--I have urged the House of
Representatives and I have urged the White House that we should take up
No Tax on Tips in the House and pass it. And I said: Look, if the House
passes it, I think there is a very real chance the Senate will pass it.
It is bipartisan legislation.
And what we just saw is the Senate passing No Tax on Tips 100 to 0.
Every Democrat voted yes. Every Republican voted yes. And, by the way,
the backstory--just kind of pulling the curtain back on how this
process operates--the way the process operates is, when you are seeking
to pass something by unanimous consent, you circulate what is called a
hotline, and every Senator gets the chance to say: Are you going to
object?
And on the Republican side, every Senator said: Nope, good by me.
And on the Democrat side, every Senator said: Nope, good by me.
And so this is now passed, and we are sending it to the House of
Representatives.
Here is the good news. With what we just saw now, the certainty that
we will see No Tax on Tips become the law of the land, I think, is very
close to 100 percent. As the Senator from Nevada mentioned, it is
included in the House's One Big Beautiful Bill, and whether it passes
freestanding or as part of the bigger bill, one way or another, No Tax
on Tips is going to become law and give real relief to hard-working
Americans.
So I am proud of what the Senate just did, and I commend Democrats
and Republicans, even at a time of partisan division, coming together
and agreeing on this commonsense policy. I think that is terrific for
workers in all 50 States.

[[Page S2995]]

I yield the floor.

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