Republican senate passes ‘No Tax on Tips Act’ in a unanimous vote | What is it?

In an unexpected development, the Republican-controlled United States Senate swiftly approved the 'No Tax on Tips Act' on May 20 (Tuesday) in a “unanimous vote” process, NBC News reported.

This comes as an endorsement of one of President Donald Trump's campaign promises in 2024. Notably, the bill has bipartisan support.

What is the ‘No Tax on Tips’ Act?

Introduced by Republican Senator Ted Cruz in January, the legislation would create a new tax deduction worth up to $25,000 for tips, limited to cash tips that that workers report to employers for withholding purposes on payroll taxes.

The tax break is also restricted to employees who earn earn $160,000 or less in 2025, an amount that will rise with inflation in upcoming years.

Democratic co-sponsors of the bill were Nevada Senators Jacky Rosen and Catherine Cortez Masto.

What is “unanimous consent” process for US bills?

On May 20, Rosen brought up the 'no tax on tips' bill for "unanimous consent" in the Senate. The process is routinely used for more ordinary issues, where even one objection can put a stop to the matter in Senate, as per the report.

Usually heavyweight bills such as those on tax have more complex processes, but since no one objected to Rosen's proposition, the legislation passed with approval from all 100 in attendance, it added.

Bipartisan support, why did some Democrats support Trump's bill?

Rosen said she supported the bill because it would provide “immediate financial relief for countless hard-working families” in her state, as per the report.

“Nevada has more tipped workers per capita than any other state. So this bill would mean immediate financial relief for countless hard-working families. 'No Tax on Tips' was one of President Trump’s key promises to the American people, which he unveiled in my state of Nevada. And I am not afraid to embrace a good idea, wherever it comes from,” she said.

Celebrating the approval, New York Democrat and Senate Minority Leader Chuck in a statement said, “Working Americans — from servers, to bartenders, delivery drivers, and everything in between — work hard for every dollar they earn and are the ones who deserve tax relief, not the ultra-rich. While President Trump and Republicans push tax breaks for billionaires and stick the middle class with the bill, Senate Democrats are standing strong to protect America’s working families.”

What's next for the Bill?

The next step in the approval process is for the bill to move to the US House of Representatives. The report noted that with support from Democrats, the administration has options to implement it.

Speaking on the Senate floor, Cruz said, “Whether it passes free-standing or as part of the bigger bill, one way or another, ‘No Tax on Tips’ is going to become law and give real relief to hard-working Americans. So I’m proud of what the Senate just did, and I commend Democrats and Republicans, even at a time of partisan division, coming together and agreeing on this commonsense policy.”