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Senate Passes Bill to Cut Taxes on Tips: Here's Everything You Need to Know

  • The U.S. Senate unanimously approved the No Tax on Tips Act this week, advancing the proposal to the House for consideration.
  • This legislation follows President Trump’s 2024 campaign pledge to eliminate federal income tax on tips, a promise aimed at helping working-class service employees.
  • The bill would create a tax deduction up to $25,000 for eligible workers making less than $160,000 in 2025, applying to traditionally tipped occupations including service and personal care roles.
  • Congressional budget analysts estimate the deduction would add $40 billion to the deficit by 2028, while advocacy groups caution that it might primarily benefit higher-income tipped employees.
  • While the bill enjoys bipartisan and employer support, some critics argue it distracts from efforts to raise the minimum wage and may inadequately assist the lowest-earning service workers.
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NBC Dallas-Fort Worth broke the news in Fort Worth, United States on Wednesday, May 21, 2025.
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