WASHINGTON — Today, Congressman Vern Buchanan, Vice Chairman of the House Ways and Means Committee, and Congressman Byron Donalds announced that they have introduced the No Tax on Tips Act to exempt tips from federal income tax. The Senate companion bill was introduced by Sen. Ted Cruz, Chairman of the Senate Commerce Committee, and co-sponsored by Sen. Steve Daines, a member of the Senate Finance Committee. The bipartisan, bicameral bill allows taxpayers to claim a deduction at filing 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, said Buchanan. “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.”
The No Tax on Tips Act eliminates federal income tax on qualified tips through a deduction at filing. The maximum deduction allowed for any taxable year is $25,000, and highly compensated employees cannot claim the deduction. Further, the bill requires the Secretary of the Treasury to limit deduction to traditionally tipped occupations, such as waiters, hospitality workers and beauticians.
President-elect Trump originally proposed this policy on the campaign trail last June. Then-Democratic president candidate Kamala Harris followed suit two months later, also promising to eliminate taxes on tips.
Florida is the third highest tipping state, with Floridians tipping an average of 21.68 percent. As of 2023, Florida’s tourism industry supported approximately 2.1 million jobs, accounting for 9.5 percent of all jobs in the state. Florida’s restaurant and foodservice industry employed approximately 1,032,400 individuals, accounting for 11 percent of the state’s employment.
The No Tax on Tips Act is co-sponsored by Reps. Steven Horsford and Derrick Van Orden in the House and Sens. Jacky Rosen, Catherine Cortez Masto and Pete Ricketts in the Senate.
"For far-too-long, Washington’s focus has been on how much of your paycheck politicians and unelected bureaucrats will take to fund their destructive agendas,” said Congressman Byron Donalds (FL-19). “Americans deserve to take home more of what they have earned, especially given the self-inflicted economic hardships created by the Biden administration. I am proud to have introduced the ‘No Tax on Tips Act’ last Congress alongside Senator Cruz (R-TX) and look forward to its swift passage in the 119th Congress. Hardworking Americans across our Southwest Florida community, the Sunshine State, and the nation deserve a government that will put them first,” said Rep. Donalds.
“American workers in many industries rely on tipped wages to make ends meet. Today, I’m introducing my bipartisan No Tax on Tips Act—legislation I authored to fulfill President Trump’s promise to end the wrongful practice of taxing voluntary tips. 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. This pro-worker bill will deliver relief to families facing rising costs caused by the Biden administration’s inflationary policies,” said Sen. Cruz.
“Hard-working Montanans have been hit hard with Biden’s inflation, and by making tips tax-free we’re delivering on President Trump’s promise to lower taxes and bring back American prosperity. ‘No Tax on Tips’ will bolster the workforce and I’m looking forward to working with President Trump on more ways to unleash our economy,” said Sen. Daines.
Previously serving as Chairman of the Ways and Means Tax Policy Subcommittee, Buchanan helped oversee the successful and smooth implementation of TCJA. During the 2017 tax reform debate, he focused on lowering tax rates for individuals and small businesses and led the Small Business and Passthroughs Working Group. Buchanan has led five of the six Ways and Means Subcommittees and currently sits on the Joint Committee on Taxation, a small group of the most senior tax writers in Congress.
