Sen. Cruz reintroduces bill to exempt tips from federal income taxes

One of the most famous campaign promises of President-elect Donald Trump was that eliminate tip taxes for working Americans.

Now Congress is helping him make good on that promise, FOX Business has learned.

On Thursday, Texas Republican Sen. Ted Cruz reintroduced the No Tipping Act, a bipartisan bill he first introduced last year that aims to exempt tips from service workers from federal income taxes bring FOX Business exclusively.

If passed and signed into law, the bill will make changes Internal Revenue Code allow Americans who work in the food and beverage and beauty services industries to claim a 100% deduction for cash and non-cash tips up to $25,000 in wages. Employees earning more than $150,000 do not qualify for the tip tax exemption.

It would also fulfill part of Trump’s broader campaign promise to extend tax cuts for middle-class Americans and small businesses in the face of Biden-era inflation.

“American workers in many industries rely on tips to make ends meet,” Cruz said in an exclusive statement to FOX Business. “Today, I’m introducing my bipartisan No Tax on Tips Act, legislation that I authored. to implement President Trump’s promise to end the malpractice of taxing voluntary tips.”

TRUP TAX REDUCTIONS MUST BE MADE.

Republican presidential candidate former President Donald Trump speaks to guests during a campaign event at Drake Enterprises, an auto parts maker, on September 27, 2023 in Clinton Township, Michigan. (Scott Olson/Getty Images/Getty Images)

The legislation is not without its critics. US budget deficit under President Biden is now at nearly $2 trillion, a historic high except for when the U.S. government shut down businesses during COVID-19 and handed out free money to make up the difference recently sold, leading to higher interest rates amid fears of a deficit.

Some have expressed concern about the practicality of previous taxes on tips tipped workers often earn below the federal income tax threshold and may not even benefit from such a tax break.

Cruz introduced the original legislation last June after one of Trump’s campaign rallies, where he floated the idea of ​​tax exemptions for service workers, who represent roughly 40% of the US workforce, given that Republicans were in the minority last CongressCruz’s bill, co-sponsored only by Republicans, was not voted on.

This time, the bill has bipartisan support from Democratic Sens. Jackie Rosen, D-Nev., Catherine Cortez Masto, D-Nev. Neb. A companion bill has also been introduced in the lower house by Rep. Vern Buchanan, R-Florida.

THE US ECONOMY WILL LOSE ABOUT 6 MILLION JOBS IF CONGRESS LET TAX CUT EXPIRE.

Unidentified waitress counts tips or customer payments while working at restaurant The IRS issued a notice Monday regarding a proposed tip reporting program. (iStock / iStock)

Cruz told FOX Business he’s confident the updated legislation will pass quickly into law, given the Republican Party’s control of the House and Senate and its willingness to address the economic needs of working Americans affected by inflation.

“I’ve long believed that the GOP should be the party of bartenders, waiters and waitresses, and this bill is an important step in ensuring that we address the economic needs of working Americans,” he said to families facing rising costs caused by the inflationary policies of the Biden administration.”

The bill has already received support from industry groups, including the National Restaurant Association, the Professional Beauty Association and the International Franchise Association, which say the move could benefit restaurant workers and small businesses and help recruit workers.