The U.S. Senate’s unanimous passage of the No Tax on Tips Act signals potential relief for millions of those who rely on tips as part of their salary.
The legislation, which would eliminate federal income tax on cash tips up to $25,000 annually for eligible workers earning less than $160,000 per year, gained strong bipartisan support in an unexpected show of unity.
For entrepreneurs like Cynthia Sattah, owner of Pet-A-Coat Professional Dog Grooming, the bill represents more than just tax savings—it opens doors for business expansion.
“Currently, the business is in the basement of my home,” Sattah said. “If we were to get a building to purchase, I would be able to do a little bit more grooming and maybe have someone work for me.”
Sattah currently doesn’t even get to keep the tips she makes. It all goes to taxes.
“Right now, I’m putting them (tips) away and paying tax on them. I don’t give myself a tip. It just doesn’t work out, because by the time you have your quarterly tax, you have to send in what you have,” Sattah said.
The National Restaurant Association has thrown its weight behind the measure, stating in a recent release that “these measures are crucial for helping businesses have the working capital they need to cover payroll, manage rising supply costs, and stay competitive.”
While the Senate’s unanimous vote marks a significant milestone, the bill still requires House approval before reaching the President’s desk. The broad bipartisan support in the Senate suggests potential for similar reception in the House.