Historic 100–0 Senate Vote! Here is why!

In an extraordinary moment of unity, the United States Senate voted 100–0 to pass the “No Tax on Tips Act,” a bill that could reshape the financial landscape for millions of American workers in the service industry. Spearheaded by Senator Ted Cruz of Texas and first promised by former President Donald Trump during his 2024 campaign, the legislation aims to exempt all tips—cash, credit, or pooled—from federal income taxation. If signed into law, it would mark one of the most significant pro-worker tax reforms in modern history, delivering real relief to those who depend on gratuities to make ends meet.

For years, servers, bartenders, delivery drivers, salon professionals, and hotel staff have struggled under the weight of inconsistent income and heavy tax obligations. Senator Cruz celebrated the Senate’s unanimous vote as “a game-changer for blue-collar Americans.” He emphasized that workers in these fields have long been carrying an unfair tax burden on money earned through personal service and hard work. “This bill restores fairness,” he said, calling it a direct win for the people who keep America’s service economy alive.

The measure’s unanimous passage is almost unprecedented in a deeply divided Washington. Lawmakers on both sides recognized the importance of addressing the realities of the service workforce, especially amid inflation and rising living costs. The symbolism of a 100–0 vote goes beyond politics—it signals rare agreement that ordinary workers deserve tangible financial relief.

At its core, the No Tax on Tips Act allows workers in tipped professions to exclude up to $25,000 in annual tips from their federal taxable income. In practical terms, a server earning $45,000 in wages and $20,000 in tips would only pay taxes on the $45,000 portion. That’s a significant difference for workers who often rely on every dollar to pay rent and buy groceries.

The bill includes several key safeguards. The $25,000 exemption phases out for individuals earning above $150,000 and married couples earning over $300,000 to ensure the benefit targets working-class Americans. The Treasury Department will have 90 days after enactment to publish a list of eligible occupations—those that customarily and regularly receive tips prior to December 31, 2024. Additionally, employers will be barred from reclassifying non-tipped positions to exploit the new tax rule. The structure aims to prevent abuse and ensure fairness while keeping the focus on genuine service jobs.

The bill’s overwhelming bipartisan support is no mystery. Tipped workers make up a massive segment of the American labor force, and public backing for this change is strong. Unlike complex social programs or government subsidies, the act requires no new spending or bureaucracy. It simply allows people to keep more of what they’ve already earned. Politically, it’s an easy victory for both parties—every senator can now tell constituents that they voted to let working people keep their tips.

Democrats and Republicans alike have praised the measure’s common-sense approach. Senate Majority Leader Chuck Schumer and Senator Jacky Rosen of Nevada, whose state’s economy relies heavily on hospitality, both endorsed the bill. “This isn’t a Republican issue or a Democrat issue—it’s a worker issue,” Cruz stated. “Every American who earns an honest living deserves to keep what they’ve earned.”

For many service workers, this legislation represents more than just a tax break—it’s validation. Consider Sarah, a waitress in Texas earning $2.13 an hour plus about $1,800 in monthly tips. Under the new law, she could save as much as $3,000 a year in taxes. Marcus, a New York City bartender bringing in $25,000 annually in tips, could keep an extra $5,000 in his pocket. For Dana, a hairstylist in California balancing wage cuts during slow months, the tax relief could help her stabilize her income. These are not abstract numbers—they’re the difference between struggling and surviving.

The House of Representatives has already passed a similar version of the bill, though the two versions will need to be reconciled. The Senate’s version caps the deduction at $25,000 and includes income phase-outs, while the House version had no such limits. Lawmakers are expected to merge them into a balanced compromise—generous enough to make a real difference, but tight enough to prevent loopholes.

Industry leaders are applauding the move. The National Restaurant Association called the Senate’s vote “a historic moment for the people who make American hospitality possible.” Michele Gonzalez, a spokesperson for a restaurant coalition, said the bill finally acknowledges that tips are not “extra” money but the foundation of income for millions of Americans. Small business owners also see potential benefits. Maria Hernandez, who runs a family diner in Phoenix, noted that it could help her retain staff: “If workers can take home more, maybe they’ll finally feel their effort is being rewarded.”

Economists agree the bill could ripple through the broader economy. By boosting disposable income among millions of low- and middle-income workers, the measure is likely to spur local spending. Dr. Alan Wright of the American Enterprise Institute described it as “a clever form of stimulus that doesn’t cost the Treasury upfront.” With more cash in circulation at the community level, small businesses—from grocery stores to repair shops—stand to benefit.

Still, not everyone is without concerns. Some economists warn that exempting tips could complicate IRS enforcement or lead to underreporting, though tips must still be documented for payroll purposes. Others worry about the potential $6–8 billion annual loss in federal revenue. Proponents counter that the increase in consumer spending and job retention will more than make up for it over time. “When people have more disposable income, they spend it,” Cruz argued. “That spending keeps local economies alive.”

Now that the Senate has passed the measure, it heads back to the House for final approval before going to President Biden’s desk. The White House has not issued a formal statement, but analysts expect the president to sign it given the overwhelming bipartisan support. If enacted, the law would take effect on January 1 of the next fiscal year, allowing workers to see the benefits almost immediately during the next tax season.

Beyond the economics, the bill represents a cultural shift in how America views service work. For decades, tipped workers have occupied a strange space in the labor market—technically employees, yet often underpaid and underprotected. Their income fluctuates daily, their benefits are minimal, and until now, even their tips were taxed like corporate bonuses. This legislation finally acknowledges that imbalance and gives dignity to jobs too often overlooked.

Service workers across social media are already celebrating. One bartender in Las Vegas wrote, “Finally, someone noticed us. My tips were the only part of my income I controlled, and they still got taxed away. This is life-changing.” Online forums are flooded with similar stories from servers, hairdressers, and delivery drivers who see this as the first real win for their profession in decades.

In the end, the “No Tax on Tips Act” is about more than money—it’s about fairness. It shows that in a time of bitter political division, leaders can still come together for something that actually helps ordinary people. As Senator Jacky Rosen put it, “This is one of those moments where politics took a back seat to people.”

When historians look back, they may not remember every policy detail, but they’ll remember this: for once, every U.S. senator—Republican and Democrat alike—stood together to say, “If you serve others, you deserve to keep what you’ve earned.” And for millions of Americans who pour coffee, deliver food, drive rideshares, and work tirelessly to make daily life easier, that message is long overdue.