Sen. Ted Cruz, R-Texas, filed legislation on Thursday that would change the U.S. tax code to fulfill a major campaign pledge made last week by former President Donald Trump while he was campaigning in Nevada. During a speech there, Trump said he would make workers’ tips exempt from income taxes, which is a huge deal for a wide swath of workers in Sin City who survive mainly on tips. Cruz’s legislation would enshrine tax-free tips into law.
The text of the “No Tax on Tips Act” was exclusively obtained by FOX Business. This comes shortly after the Texas Republican announced his intentions to file the bill on “Sunday Morning Futures” earlier this week. The legislation has garnered co-sponsorship from Republican Senators Steve Daines of Montana, Rick Scott of Florida, and Kevin Cramer of North Dakota.
“American workers in dozens of industries depend on tipped wages to support themselves,” Cruz said in a statement. “Today, I am introducing pro-worker legislation, the No Tax on Tips Act, to ensure they get to keep all of those tips. This legislation is a common-sense, pro-worker bill that will help families deal with the historic inflation caused by the Biden administration.”
Daines issued his own statement: “Joe Biden’s sky-high inflation has hit hardworking Americans especially hard. Providing a much-needed tax cut for working families will help offset Biden’s high prices and get people back in the workforce.”
If the legislation is passed and signed into law, it would amend the Internal Revenue Service code to exempt cash tips from federal income tax. Taxpayers would be allowed to claim a 100% above-the-line deduction for tipped wages when filing their taxes. According to Cruz’s office, the definition of “cash tips” in the bill includes tips received in actual cash, as well as those received via credit and debit card charges, and checks.
The senators’ proposed legislation mirrors a bill introduced by House Republicans earlier this week, called the “Tax Free Tips Act.” Both bills were proposed after Trump, the expected GOP presidential nominee, voiced support for the idea of eliminating taxes on tips earlier this month while in Vegas. “When I get into office, we’re not going to charge taxes on tips, people making tips,” he said June 9. “We’re going to do that right away, first thing in office, because it’s been a point of contention for years and years and years,” Trump said.
Several GOP senators said Trump raised the issue again during his closed-door meeting with them on Capitol Hill last week.
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