Already a subscriber? Make sure to log into your account before viewing this content. You can access your account by hitting the “login” button on the top right corner. Still unable to see the content after signing in? Make sure your card on file is up-to-date.

The United States Senate has unanimously passed the No Tax on Tips Act, a bipartisan bill aimed at exempting up to $25,000 in annual tips from federal income tax for millions of American workers.

Some shit you should know before you read: Back on the campaign trail, President Donald Trump first unveiled the idea of eliminating federal income taxes on tips during a rally in Nevada, presenting it as a way to ease the financial burden on service industry workers. The idea quickly gained bipartisan momentum, with former President Joe Biden and Vice President Kamala Harris expressing support for the concept at their own events in Nevada. Tipped workers—such as servers, bartenders, delivery drivers, and salon professionals—comprise a substantial part of the US labor force, with around 4 million Americans in tipped occupations as of 2023, or roughly 2.5% of all employment, according to the Budget Lab at Yale University. In states like Nevada, where tipping is especially prevalent, approximately 25% of workers rely on tips as part of their income.

What’s going on now: In a rare display of unanimous support, the US Senate passed the No Tax on Tips Act through a voice vote using a process known as unanimous consent, typically reserved for non-controversial measures. The bill, introduced by Sen. Ted Cruz (R-TX) and co-sponsored by Democratic Senators Jacky Rosen and Catherine Cortez Masto of Nevada, sailed through without objection.

The bill lets qualifying workers in customarily tipped jobs, like waiters, deduct up to $25,000 in tips from their taxable income starting in 2025. To qualify, workers must report their tips to their employer, ensuring payroll taxes are still withheld. Eligible workers must also earn less than $160,000 in the previous tax year.

The deduction applies to both cash and digital tips. However, tips aren’t excluded from taxation when received—workers still pay during the year and get the amount back when filing taxes.

While the move had bipartisan support, some independent analysts found that it could cost the US government over $100 billion in lost revenue over 10 years.