Texas Republican Senator Ted Cruz has announced the unanimous Senate passage of his “No Tax on Tips Act,” which aligns with Donald Trump’s campaign promise to eliminate federal taxes on tipped income. The bill, which Cruz introduced with bipartisan support, aims to benefit millions of Americans—especially blue-collar workers—who depend on tips as a significant part of their earnings.

The legislation defines tips to include payments received in cash, via check, credit card, or through tip-sharing. It allows workers to deduct 100% of their tipped wages from taxable income. To prevent misuse, the bill includes guardrails to ensure only traditionally tipped jobs qualify, with eligibility tied to roles earning tips before December 31, 2024.

The Senate version caps the deduction at $25,000 per year and reduces its value gradually for individuals earning more than $150,000 or married couples earning over $300,000. In contrast, the House version has no deduction cap but disqualifies filers once their income reaches $160,000. If approved, the bill would take effect from 2025 through 2028 and apply to both itemized and standard deduction filers.

Cruz connected the legislation to broader Republican goals of cutting taxes and encouraging job growth. He noted his past efforts in the 2017 tax reform law and the USMCA trade agreement. Cruz also received recognition from the U.S. Chamber of Commerce for his work benefiting Texas businesses.

The House, which is also GOP-controlled, is expected to take up the measure as part of a wider tax reform package. High-profile Democrats, including Senators Chuck Schumer and Jackie Rosen, have publicly supported the bill, signaling its strong bipartisan momentum.