A new bipartisan, bicameral bill that would exempt tips from federal income tax was introduced Wednesday.
U.S. Reps. Vern Buchanan (R-FL) and Byron Donalds (R-FL) introduced the No Tax on Tips Act, while U.S. Sens. Ted Cruz (R-TX) and Steve Daines (R-MT) introduced companion legislation in the Senate. The legislation would allow taxpayers to claim a deduction when filing their income tax for qualified tipped wages.
“Florida’s tourism-driven economy thrives because of the hardworking men and women in our restaurant and hospitality industries, many of whom rely on tipped wages to support their families,” Buchanan, the vice chair of the House Ways and Means Committee, said. “I’m introducing the No Tax on Tips Act with Congressman Donalds to ensure that these essential workers are able to keep more of the money they’ve earned, without interference from Washington. As Vice Chairman of the House Ways and Means Committee, and a former Chairman of the Tax Subcommittee, cutting taxes for working Americans is my top priority.”
Officials said the legislation would eliminate federal income tax on qualified tips up to $25,000 for any taxable year. Additionally, highly compensated employees cannot claim the deduction the law makers said. The bill also require the U.S. Treasury Secretary to limit the deduction to traditionally tipped occupations like food service waiters, hospitality workers and beauticians.
“American workers in many industries rely on tipped wages to make ends meet,” Cruz said. “I’ve long believed the GOP should be the party of bartenders, of waiters and waitresses, and this bill is an important step to ensure we are addressing the economic needs of working Americans.”
The legislation is co-sponsored by U.S. Reps. Steven Horsford (D-NV) and Derrick Van Orden (R-MN), and U.S. Sens. Jacky Rosen (D-NV), Catherine Cortez Masto (D-NV), and Pete Ricketts (R-NB).