What Is the 'No Tax on Tips Act'? Here's How It Could Boost Paychecks for Millions of Tipped Workers
A new bill making waves in Washington could be a game-changer for millions of Americans working in the service industry.
The “No Tax on Tips Act,” has passed the U.S. Senate with a unanimous 100-0 vote—and it could mean bigger take-home pay for bartenders, waitstaff, hotel workers, and more.
What Is the No Tax on Tips Act?
This landmark legislation would allow tipped employees and independent contractors to deduct 100% of their tips from federal income taxes.
That includes cash, card, or check-based tips—offering real relief to workers who rely on gratuities to make ends meet.
Under the bill, eligible workers earning less than $160,000 per year in 2025 can claim this tax break.
If passed by the House and signed into law, the measure will remain in effect through 2028, providing multi-year stability for those in tip-dependent professions.
Who Qualifies for This Tax Break?
The proposed tax relief is aimed at workers in industries where tipping is standard, including:
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Restaurant and hospitality workers
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Bartenders and baristas
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Delivery drivers and rideshare contractors
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Hotel staff, bellhops, and housekeeping teams
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Hair stylists, nail techs, and spa professionals
The Treasury Department will finalize a full list of eligible occupations, potentially expanding the benefit even further.
Good News for Business Owners Too
This bill doesn’t just help employees—it supports employers as well.
Beauty and personal care businesses, such as salons and spas, would now qualify for payroll tax credits on employee tips, a benefit that was previously exclusive to the food and beverage industry.
Why Is This a Big Deal?
For many tipped workers, taxes on gratuities cut deeply into already modest paychecks.
With this legislation, workers would get to keep 100% of their earned tips, helping them better cover rising costs of living.
What's Next?
While the Senate has already approved the measure, it must now pass through the House of Representatives before being signed into law by President Trump.
Given its strong bipartisan support, passage seems likely in the coming weeks.
If enacted, the “No Tax on Tips Act” would be one of the most significant tax reforms for service industry workers in recent history.
It’s poised to increase take-home pay, improve job satisfaction, and stimulate spending in local economies.
Bottom Line
For millions of Americans working in tip-based jobs, this bill could deliver long-awaited financial relief.
From restaurants to beauty salons, the “No Tax on Tips Act” promises to reward hard work, increase paychecks, and reduce tax burdens—and that’s something both sides of the aisle can agree on.
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