I've been seeing a lot of misinformation on this... everything from Democrats actually introduced the bill, to It's only for cash tips, not credit card tips, etc... All of which is completely incorrect. I've seen a bunch of Tweets too where people are harassing Republicans for being stupid because of the misinformation they've been told. I still have access to WestLaw, so I did some research and wrote it all down.
BLUF: It was introduced by Ted Cruz back in June of 2024. It's a
Named Law called "No Tax On Tips Act," it's separate from the spending bill, and it includes not just "cash" tips, but tips paid by credit card, or in tip-sharing arrangements. So, it covers all tips. Here is my LONG explaination:
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Ok, I looked it up in WestLaw. “No Tax On Tips” is a “Named Law” which refers to “Senate Bill” S.B. 129, which was actually introduced in the Senate by Republican Senator Ted Cruz as S.4621 in the 118th 2nd Session (so back in June of 2024). It was co-sponsored in the Senate by Rick Scott, Steve Daines, and Kevin Cramer.
It was then sent to the House in the 118th Congress (2nd Session) in July of 2024 by Mr. Byron Donalds of Florida, and Mr. Van Orden of Wisconsin, to evaluate the bill and prepare it for a vote in committee.
It was sent to committee as H.R. 482 in January of 2025 with two more co-sponsors, by Mr. Buchanan (Republican), Mr. Donalds (Republican), Mr. Van Orden (Republican), and Mr. Horsford (Democrat).
It was passed by the House in January of 2025, and re-introduced into the Senate again as S.B. 129 by Ted Cruz, Mr. Daines, Ms. Rosen, Mr. Rickets, Ms. Cortez-Masto, Mr. Hawley, Mr. Scott and Mr. Cramer.
It passed Senate Finance Committee earlier in the year (January) and is listed as currently “Engrossed” in the Senate as of May 20th, 2025 as “An Act.” I believe it is not listed as official yet, because it hasn’t been added to the Congressional Federal Register yet (as it hasn't been signed by Trump yet), but it passed as a “named law” (separately from the rest of the spending bill).
The confusion is that originally it listed “Cash Tips” … which is using the IRS definition, which I explained is anything that’s considered part of a normal payment for services (which are defined as restaurants, etc.). In the latest version, which was the one that passed, they refer to the term as “Qualified Tips” and references “cash tip” as defined by the IRS, which the IRS refers as:
“
Cash tips include: those received directly from customers, electronically paid tips distributed to the employee by their employer and tips received from other employees under any tip-sharing arrangement. All cash tips must be reported to the employer.”
Or put a bit more organized:
• Cash tips received directly from customers.
• Tips added to credit card payments.
• Tips shared with other employees under tip-sharing arrangements.
The latest bill (which passed on Tuesday) also further defined the types of businesses that it includes as viable from cash tips, and also adds a whole section (long) for beauty stuff… such as nail care esthetics, etc. I can’t link to WestLaw because it’s a paid-for service. And for the record, it was introduced by Ted Cruz. It didn’t get buy-in from Democrats until just this month. The bill had been on-going for a year, and only had Republican support until January.
FYI, the IRS defines these as “Cash Tips” because they are cashed out at the end of the day to the employee. So when people pay with credit card, it’s usually paid out as cash from the till at the end of the night (traditionally)… though with Square and stuff, it tends to go on the ADP statement as a “Cash Tip.”
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Just wanted to mention that here, because I'm seeing a LOT of disinformation being pushed out by troll farms and Democrats trying to trash this bill... for whatever it's worth.
