# Plain Language Summary: No Tax on Tips Act

This bill would make tips that workers receive completely tax-free. Right now, tips are considered income and workers have to pay federal income taxes on them. Under this law, if you're a server, bartender, delivery driver, hairdresser, or anyone else who receives tips, you wouldn't have to report those tips as income or pay taxes on them. This applies to all tips—whether they're cash tips, credit card tips, or any other form of gratuity customers give you.

The practical effect is straightforward: workers who rely on tips would keep more money in their pockets. A server who makes $30,000 a year in tips would no longer owe federal income taxes on that money. This could mean hundreds or even thousands of dollars more per year for tipped workers, depending on how much they earn in tips and their tax bracket. The change would apply to anyone receiving tips, whether they work in restaurants, salons, rideshare services, or any other tipped profession.

However, there's an important trade-off to consider. The government would lose tax revenue from this change, which means less money coming in to fund federal programs and services. Some people argue this primarily benefits workers in lower-income jobs who need the money most, while others worry about the lost revenue and question whether this is the best way to help service workers. The bill essentially treats tips differently from regular wages, creating a special tax exemption just for gratuities.

No Tax on Tips Act

Cruz, Ted

No Tax on Tips Act&nbsp;This bill allows a deduction from gross income (above-the-line tax deduction) for cash tips received by a taxpayer.&nbsp;