Cruz is advocating for the bill, which seeks to exempt tips from federal income tax and was a key promise made by Trump during his campaign. The legislation is designed to assist millions of American workers who depend on tips as a major part of their earnings.

“President Trump pledged to the American public that he would abolish taxes on tips. In Congress, I established a bipartisan, bicameral coalition to achieve this goal, and in the Senate, I introduced the No Tax on Tips Act. Today, I collaborated with Senator Rosen on the Senate floor to ensure the bill’s passage,” Cruz stated.

Cruz highlighted the potential benefits of the legislation for working-class families: “This law will significantly affect millions of Americans by safeguarding the hard-earned income of blue-collar workers, who are often living paycheck-to-paycheck. I urge my colleagues in the House to approve this vital bill and forward it to the President for his signature.”

The “No Tax on Tips Act” defines “cash tips” to encompass checks, cash, credit card payments, and debit card transactions. Workers can claim a full 100% deduction for wages received on their federal income tax returns.

The updated version of the bill includes “guardrails” to ensure that only tipped employees benefit from the exemption. Cruz aims to reduce taxes and generate more employment opportunities, which is the essence of this congressional initiative.

He played a pivotal role in the 2017 tax reform that significantly lowered taxes for both individuals and businesses, consistently advocating for the permanence of those tax reductions.

Cruz also significantly contributed to the passage of the USMCA trade agreement, which he views as a victory for Texas’s industrial and agricultural sectors. The U.S. Chamber of Commerce recognized his efforts to support Texas businesses by awarding him the esteemed “Spirit of Enterprise” award.

As reported by CNBC, the legislation is currently in the House, which is under GOP control.

Republicans have proposed a tax benefit for tipped employees as part of a tax reform initiative introduced by the Senate Finance Committee on Monday. In the upcoming weeks, GOP lawmakers will strive to pass their multitrillion-dollar megabill.

The Senate’s proposal, which aims to honor President Trump’s campaign promise of “no tax on tips,” closely resembles a provision that was implemented by House Republicans in May as part of a domestic policy bill.

In all versions, the tax relief is designed as a deduction for qualifying gratuities. The Senate bill characterizes such tips as those given in cash, charged, or received through a tip-sharing arrangement.

This measure would permit taxpayers, including both employees and independent contractors, to claim it from 2025 to 2028. Filers may benefit regardless of whether they itemize deductions on their tax returns or opt for the standard deduction.

Matt Gardner, a senior scholar at the Institute on Taxation and Economic Policy, mentioned in an email that the Senate proposal diverges from the House version in two significant respects.

Firstly, Gardner pointed out that the Senate plan would establish the tax deduction at $25,000 annually, whereas the House version would not impose a cap.

He also indicated that the income thresholds operate differently under the Senate legislation.

The House bill removes the tax deduction once an individual’s annual income reaches $160,000.

Conversely, the Senate version would gradually reduce the value of the tax deduction if an individual’s income surpassed $150,000, or $300,000 for married couples. The Senate would decrease the tax benefit’s value by $100 for every $1,000 of income that exceeds the specified limit.

Senate Republicans, similar to their counterparts in the House, would limit the tax benefit to tipped employees in positions that have historically and consistently received tips on or before December 31, 2024.

The bill stipulates that the Secretary of the Treasury of the United States must release a list of these positions within 90 days following the enactment of the legislation.

Prominent Democrats, including New York Senator Chuck Schumer and Nevada Senator Jackie Rosen, have commended the proposal.