United States 119th Congress Status: Passed Senate Bipartisan · 7 R · 2 D cosponsors

S 129 — No Tax on Tips Act

Last action — Held at the desk.

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  1. ✓
    Introduced
  2. ✓
    In Committee
  3. 3
    Passed Senate
  4. 4
    Passed House
  5. 5
    To Executive
  6. 6
    Enacted

This bill has passed the Senate. Introduced January 16, 2025. It now moves to the second chamber.

Next likely step: consideration and a floor vote in the House.

Prognosis

Advancing 54% · moderate confidence

Where this bill stands today.

Odds of enactment

Moderate

How often bills like it became law.

  • Passed Senate

    Current position in the legislative process.

  • 9 sponsors

    1 primary, 8 co-sponsors signed on.

  • Bipartisan support

    Sponsored across 2 parties (7 R · 2 D) — cross-party backing.

Prognosis reads this bill's own signals — stage, sponsorship breadth, committee status, recorded votes and cross-state momentum. Odds come from a model trained on which bills have become law.

In plain language

This bill creates a tax deduction for tips and expands related tax credits for businesses.

The bill provides a new tax deduction for cash tips received by employees in tipped occupations, limited to $25,000. It also broadens the tax credit for businesses covering payroll taxes on tips in beauty services.

What this means for you
  • Workers: This means tipped workers could receive a larger tax deduction for tips they earn.
  • Small Business: Small businesses in the beauty sector can benefit from expanded tax credits related to payroll taxes on tips.

Summary

No Tax on Tips ActThis bill establishes a new tax deduction of up to $25,000 for tips, subject to limitations. The bill also expands the business tax credit for the portion of payroll taxes an employer pays on certain tips to include payroll taxes paid on tips received in connection with certain beauty services.Under the bill, the new tax deduction for tips is limited to cash tips (1) received by an employee during the course of employment in an occupation that customarily receives tips, and (2) reported by the employee to the employer for purposes of withholding payroll taxes. (Under current law, an employee is required to report tips exceeding $20 per month to their employer.)Further, an employee with compensation exceeding a specified threshold ($160,000 in 2025 and adjusted annually for inflation) in the prior tax year may not claim the new tax deduction for tips.Finally, the bill expands the business tax credit for the portion of payroll taxes that an employer pays on certain tips to include payroll taxes paid on tips received in connection with barbering and hair care, nail care, esthetics, and body and spa treatments. (Under current law, an employer is allowed a business tax credit for the amount of payroll taxes paid on certain tips received by an employee in connection with providing, delivering, or serving food or beverages.)

Bill Text

What changed in the latest version

6 added · 9 removed

Plain-language change summary

The updated version of the bill includes a reference to the passage of the bill in the Senate on May 20, 2025, and removes details about its introduction, including the date and the names of the sponsors. This change signifies that the bill has progressed through the legislative process to a later stage, eliminating earlier procedural information.

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129 Introduced in Senate (IS)] <DOC> 119th CONGRESS 1st Session S.
129 Engrossed in Senate (ES)] <DOC> 119th CONGRESS 1st Session S.
129 To amend the Internal Revenue Code of 1986 to eliminate the application of the income tax on qualified tips through a deduction allowed to all individual taxpayers, and for other purposes.
129 _______________________________________________________________________ AN ACT To amend the Internal Revenue Code of 1986 to eliminate the application of the income tax on qualified tips through a deduction allowed to all individual taxpayers, and for other purposes.
_______________________________________________________________________ IN THE SENATE OF THE UNITED STATES January 16, 2025 Mr.
Cruz (for himself, Mr.
Daines, Ms.
Rosen, Mr.
Ricketts, Ms.
Cortez Masto, Mr.
Hawley, Mr.
Scott of Florida, and Mr.
Cramer) introduced the following bill;
which was read twice and referred to the Committee on Finance _______________________________________________________________________ A BILL To amend the Internal Revenue Code of 1986 to eliminate the application of the income tax on qualified tips through a deduction allowed to all individual taxpayers, and for other purposes.
<all>
Passed the Senate May 20, 2025.
Attest:
Secretary.
119th CONGRESS 1st Session S.
129 _______________________________________________________________________ AN ACT To amend the Internal Revenue Code of 1986 to eliminate the application of the income tax on qualified tips through a deduction allowed to all individual taxpayers, and for other purposes.
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How this bill changes current law

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AI-generated reading aid from the bill's amendatory text — verify against the official bill.

The bill establishes a deduction for qualified tips to eliminate income tax on those tips for individual taxpayers.

  • Part VII of subchapter B of chapter 1 of the Internal Revenue Code of 1986

    SEC. 224. QUALIFIED TIPS. (a) In General.--There shall be allowed as a deduction an amount equal to the qualified tips received during the taxable year that are included on statements furnished to the employer pursuant to section 6053(a). (b) Maximum Deduction.--The deduction allowed by subsection (a) for any taxpayer for the taxable year shall not exceed $25,000. (c) Qualified Tips.--For purposes of this section-- (1) In general.--The term `qualified tip' means any cash tip received by an individual in the course of such individual's employment in an occupation which traditionally and customarily received tips on or before December 31, 2023, as provided by the Secretary. (2) Exclusion for certain employees.--Such term shall not include any amount received by an individual in the course of employment by an employer if such individual had, for the preceding taxable year, compensation (within the meaning of section 414(q))(4) from such employer in excess of the amount in effect under section 414(q)(1)(B)(i).

    This new section allows taxpayers to deduct qualified tips from their income, reducing their tax liability, and defines what constitutes a qualified tip.

  • Section 63(b) of the Internal Revenue Code of 1986

    the period at the end of paragraph (4) → and

    This change allows a new deduction for qualified tips for non-itemizers.

  • Section 67(b) of the Internal Revenue Code of 1986

    the period at the end of paragraph (12) → , and

    This amendment excludes the deduction for qualified tips from being treated as a miscellaneous itemized deduction.

  • Section 68(c) of the Internal Revenue Code of 1986

    the period at the end of paragraph (3) → , and

    This change ensures that the deduction for qualified tips is not counted under the overall limitation on itemized deductions.

  • Section 45B(b)(2) of the Internal Revenue Code of 1986

    only tips received from customers or clients in connection with the following services: → In applying paragraph (1) there shall be taken into account only tips received from customers or clients in connection with the following services: (A) The providing, delivering, or serving of food or beverages for consumption, if the tipping of employees delivering or serving food or beverages by customers is customary. (B) The providing of beauty services to a customer or client if the tipping of employees providing such services is customary.

    This change broadens the scope of the tip credit to include beauty services.

  • Section 45B of the Internal Revenue Code of 1986

    For purposes of this section, the term `beauty service' means any of the following: (1) Barbering and hair care. (2) Nail care. (3) Esthetics. (4) Body and spa treatments.

    This addition provides a clear definition of what constitutes beauty services eligible for tip credits.

Action History

  1. Received in the House.

  2. Held at the desk.

  3. Message on Senate action sent to the House.

  4. Senate Committee on Finance discharged by Unanimous Consent.

  5. Senate Committee on Finance discharged by Unanimous Consent.

  6. Passed/agreed to in Senate: Passed Senate without amendment by Unanimous Consent.

  7. Passed Senate without amendment by Unanimous Consent. (consideration: CR S2993-2995; text: CR S2993-2994)

  8. Introduced in Senate

  9. Read twice and referred to the Committee on Finance.

Sponsors

Sponsorship breakdown

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1 sponsors · 8 co-sponsors · 538 not signed on

Sponsors (1)

Co-sponsors (8)

Not signed on (538)

538 members have not signed on to this bill.

Show all 538 →

"Not signed on" means a member has not sponsored or co-sponsored this bill — it does not imply opposition. Members flagged Voted No have a recorded No vote on this bill.

Whip count is in markup. Polling the chamber and every recorded vote this session. Only the first open is slow. It’s instant for you after this. Calling the roll · Tallying · Engrossing

Subjects

taxation
Cross-referencing the record. Reading this bill against every other bill in the corpus by meaning, not keywords. Only the first open is slow. It’s instant for you after this. Matching · Ranking · Engrossing

Frequently asked questions

What does S 129 do?
No Tax on Tips ActThis bill establishes a new tax deduction of up to $25,000 for tips, subject to limitations. The bill also expands the business tax credit for the portion of payroll taxes an employer pays on certain tips to include payroll taxes paid on tips received in connection with certain beauty services.Under the bill, the new tax deduction for tips is limited to cash tips (1) received by an employee during the course of employment in an occupation that customarily receives tips, and (2) reported by the employee to the employer for purposes of withholding payroll taxes. (Under current law, an employee is required to report tips exceeding $20 per month to their employer.)Further, an employee with compensation exceeding a specified threshold ($160,000 in 2025 and adjusted annually for inflation) in the prior tax year may not claim the new tax deduction for tips.Finally, the bill expands the business tax credit for the portion of payroll taxes that an employer pays on certain tips to include payroll taxes paid on tips received in connection with barbering and hair care, nail care, esthetics, and body and spa treatments. (Under current law, an employer is allowed a business tax credit for the amount of payroll taxes paid on certain tips received by an employee in connection with providing, delivering, or serving food or beverages.)
Who sponsors S 129?
S 129 is sponsored by Daines, Steve (Republican), Rosen, Jacky (Democratic), Ricketts, Pete (Republican), Cortez Masto, Catherine (Democratic), Hawley, Josh (Republican), Scott, Rick (Republican), Cramer, Kevin (Republican), Marshall, Roger (Republican), and Cruz, Ted (Republican).
What is the current status of S 129?
This bill has passed the Senate. Introduced January 16, 2025. It now moves to the second chamber.
Where can I track S 129?
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