‘No Tax on Tips Act’ introduced in Congress with help from Nevada delegation

Cutting taxes on tips became a cornerstone campaign issue last year for both President-elect Donald Trump and Democratic nominee Kamala Harris, after Trump announced the proposal during a campaign stop in Las Vegas. 

Federal lawmakers on Thursday introduced new bipartisan legislation that would eliminate federal income taxes on tipped income — a measure already supported by one of Nevada’s most powerful labor unions. 

The No Tax on Tips Act, which was introduced by US Sens. Jacky Rosen (D-Nevada) and Ted Cruz (R-Texas), would exempt tipped wages from federal income tax, according to a release from Rosen’s office. Rosen and Cruz had both introduced separate proposals last year to eliminate taxes on tips, and the bill introduced Thursday appears to strike a consensus between the two measures. 

Cutting taxes on tips became a cornerstone campaign issue last year for both President-elect Donald Trump and Democratic nominee Kamala Harris, after Trump announced the proposal during a campaign stop in Las Vegas. 

Rosen in a statement said this measure eliminates a loophole that would allow corporate executives to claim bonuses as tipped income, and is designed to uplift hospitality workers who need it the most. 

“Nevada’s service and hospitality workers are the backbone of our economy, and they deserve financial relief at a time when they are getting squeezed by rising costs,” Rosen said. “This bipartisan bill will ensure tipped workers in Nevada can keep more of their hard-earned money.”

The bill was almost immediately co-sponsored by Nevada Democrat Catherine Cortez Masto and others, and an identical version of the bill was also filed in the US House with the help of Nevada Democratic Rep. Steven Horsford. 

Horsford’s office said in a separate statement he will file companion legislation in the coming weeks that would eliminate the subminimum wage for tipped workers, which is currently permitted in 43 states. 

“I will not make the perfect the enemy of the good – the bipartisan and bicameral No Tax on Tips Act is a step in the right direction, even if I would prefer to step further,” Horsford said in the release. “My bill would eliminate the sub-minimum wage just as Nevada has done, ensuring hard working Americans never earn poverty wages of $2.13 an hour. It also closes a loophole preventing wealthy parents from evading taxes on gifts to their relatives by claiming those gifts are tips.”

He continued: “While my bill is stronger, the No Tax on Tips Act is a second opportunity for us to eliminate the income tax requirement for most tipped workers and ensure that bad actors can’t use it in inappropriate ways.”

The measure is also being supported by the Culinary Workers Union, which represents more than 60,000 servers, bartenders and other hospitality workers across Nevada. 

“This bill is a critical step to ensure one job is enough for workers to support their families,” Ted Pappageorge, the union’s secretary-treasurer, said in a statement. “Republicans have made promises to lower the cost of living for Americans, delivering on those commitments must start with meaningful action. In addition to eliminating taxes on tips, they must work with Democrats to raise the sub-minimum wage and address corporate greed driving up prices on essential goods like food, gas, and housing. It’s time for Congress to act now to deliver on real solutions for working families.”