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The conversation about eliminating income taxes on tips is back on the table with the reintroduction of the No Tax on Tips Act of 2025. Initially championed by President Trump during his presidency, the bill aims to provide relief to tipped workers by allowing them to keep more of their hard-earned income. Reintroduced last week by Senator Ted Cruz, the bipartisan legislation comes with important updates designed to make the policy both effective and fiscally responsible.

Key Updates in the No Tax on Tips Act of 2025

The latest version of the bill includes the following changes:

• Deduction Cap: The tax deduction for qualified tips is capped at $25,000 per worker annually.
• Income Limitations: Only workers earning less than $155,000 per year are eligible for the deduction.
• Industry Definitions: The Secretary of the Treasury is tasked with defining which industries qualify for this deduction, ensuring the benefit targets those who need it most.

Support from the Restaurant Industry

The restaurant and foodservice sector is one of the largest employers of tipped workers, with more than 2 million servers and bartenders relying on tips as a significant portion of their income. Leaders in the industry have expressed strong support for the legislation.

Sean Kennedy, Executive Vice President of Public Affairs for the National Restaurant Association, praised the bill, stating:

“Eliminating taxes on tips would put cash back in the pocket of a significant number of workers in the restaurant and foodservice industry and could help restaurant operators recruit industry workforce. The No Tax on Tips Act of 2025 is sensible legislation that includes refinements and protections to make it fiscally responsible while still supporting our employees.”

Kennedy also emphasized the broader importance of tax policies that promote growth in the restaurant industry:

“Tax policy plays a major role in the success of the restaurant industry, so we’ll continue to work with Congress on this and other common-sense tax policies that will stimulate investments and improvements in restaurants of all sizes and help operators make greater investments in their workforce and communities.”

What’s Next?

As the bill progresses through Congress, the restaurant industry will continue to advocate for this legislation as a vital tool for supporting tipped workers and strengthening workforce recruitment efforts. By allowing servers and bartenders to keep more of their tips, the No Tax on Tips Act could have a meaningful impact on the livelihoods of millions of employees across the country.

For the full statement from the National Restaurant Association, click here.