II
119THCONGRESS
1
STSESSION S. 129
To amend the Internal Revenue Code of 1986 to eliminate the application
of the income tax on qualified tips through a deduction allowed to
all individual taxpayers, and for other purposes.
IN THE SENATE OF THE UNITED STATES
JANUARY16, 2025
Mr. C
RUZ(for himself, Mr. DAINES, Ms. ROSEN, Mr. RICKETTS, Ms. CORTEZ
M
ASTO, Mr. HAWLEY, Mr. SCOTTof Florida, and Mr. CRAMER) intro-
duced the following bill; which was read twice and referred to the Com-
mittee on Finance
A BILL
To amend the Internal Revenue Code of 1986 to eliminate
the application of the income tax on qualified tips
through a deduction allowed to all individual taxpayers,
and for other purposes.
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. SHORT TITLE. 3
This Act may be cited as the ‘‘No Tax on Tips Act’’. 4
SEC. 2. DEDUCTION FOR QUALIFIED TIPS. 5
(a) I
NGENERAL.— 6
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(1) DEDUCTION ALLOWED .—Part VII of sub-1
chapter B of chapter 1 of the Internal Revenue Code 2
of 1986 is amended by redesignating section 224 as 3
section 225 and by inserting after section 223 the 4
following new section: 5
‘‘SEC. 224. QUALIFIED TIPS. 6
‘‘(a) I
NGENERAL.—There shall be allowed as a de-7
duction an amount equal to the qualified tips received dur-8
ing the taxable year that are included on statements fur-9
nished to the employer pursuant to section 6053(a). 10
‘‘(b) M
AXIMUMDEDUCTION.—The deduction allowed 11
by subsection (a) for any taxpayer for the taxable year 12
shall not exceed $25,000. 13
‘‘(c) Q
UALIFIEDTIPS.—For purposes of this sec-14
tion— 15
‘‘(1) I
N GENERAL.—The term ‘qualified tip’ 16
means any cash tip received by an individual in the 17
course of such individual’s employment in an occu-18
pation which traditionally and customarily received 19
tips on or before December 31, 2023, as provided by 20
the Secretary. 21
‘‘(2) E
XCLUSION FOR CERTAIN EMPLOYEES .— 22
Such term shall not include any amount received by 23
an individual in the course of employment by an em-24
ployer if such individual had, for the preceding tax-25
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•S 129 IS
able year, compensation (within the meaning of sec-1
tion 414(q))(4) from such employer in excess of the 2
amount in effect under section 414(q)(1)(B)(i).’’. 3
(2) P
UBLISHED LIST OF OCCUPATIONS TRADI -4
TIONALLY RECEIVING TIPS.—Not later than 90 days 5
after the date of the enactment of this Act, the Sec-6
retary of the Treasury (or the Secretary’s delegate) 7
shall publish a list of occupations which traditionally 8
and customarily received tips on or before December 9
31, 2023, for purposes of section 224(c)(1) of the 10
Internal Revenue Code of 1986 (as added by para-11
graph (1)). 12
(3) C
ONFORMING AMENDMENT .—The table of 13
sections for part VII of subchapter B of chapter 1 14
of such Code is amended by redesignating the item 15
relating to section 224 as relating to section 225 16
and by inserting after the item relating to section 17
223 the following new item: 18
‘‘Sec. 224. Qualified tips.’’.
(b) DEDUCTIONALLOWED TO NON-ITEMIZERS.— 19
Section 63(b) of the Internal Revenue Code of 1986 is 20
amended by striking ‘‘and’’ at the end of paragraph (3), 21
by striking the period at the end of paragraph (4) and 22
inserting ‘‘and’’, and by adding at the end the following 23
new paragraph: 24
‘‘(5) the deduction provided in section 224.’’. 25
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(c) NON-APPLICATION OF CERTAINLIMITATIONS 1
FORITEMIZERS.— 2
(1) D
EDUCTION NOT TREATED AS A MISCELLA -3
NEOUS ITEMIZED DEDUCTION .—Section 67(b) of the 4
Internal Revenue Code of 1986 is amended by strik-5
ing ‘‘and’’ at the end of paragraph (11), by striking 6
the period at the end of paragraph (12) and insert-7
ing ‘‘, and’’, and by adding at the end the following 8
new paragraph: 9
‘‘(13) the deduction under section 224 (relating 10
to qualified tips).’’. 11
(2) D
EDUCTION NOT TAKEN INTO ACCOUNT 12
UNDER OVERALL LIMITATION .—Section 68(c) of the 13
Internal Revenue Code of 1986 is amended by strik-14
ing ‘‘and’’ at the end of paragraph (2), by striking 15
the period at the end of paragraph (3) and inserting 16
‘‘, and’’, and by adding at the end the following new 17
paragraph: 18
‘‘(4) the deduction under section 224 (relating 19
to qualified tips).’’. 20
(d) W
ITHHOLDING.—The Secretary of the Treasury 21
(or the Secretary’s delegate) shall modify the tables and 22
procedures prescribed under section 3402(a) of the Inter-23
nal Revenue Code of 1986 to take into account the deduc-24
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tion allowed under section 224 of such Code (as added 1
by this Act). 2
(e) E
FFECTIVEDATE.—The amendments made by 3
this section shall apply to taxable years beginning after 4
December 31, 2024. 5
SEC. 3. EXTENSION OF CREDIT FOR PORTION OF EM-6
PLOYER SOCIAL SECURITY TAXES PAID WITH 7
RESPECT TO EMPLOYEE TIPS TO BEAUTY 8
SERVICE ESTABLISHMENTS. 9
(a) E
XTENSION OFTIPCREDIT TOBEAUTYSERVICE 10
B
USINESS.— 11
(1) I
N GENERAL.—Section 45B(b)(2) of the In-12
ternal Revenue Code of 1986 is amended to read as 13
follows: 14
‘‘(2) A
PPLICATION ONLY TO CERTAIN LINES OF 15
BUSINESS.—In applying paragraph (1) there shall 16
be taken into account only tips received from cus-17
tomers or clients in connection with the following 18
services: 19
‘‘(A) The providing, delivering, or serving 20
of food or beverages for consumption, if the tip-21
ping of employees delivering or serving food or 22
beverages by customers is customary. 23
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‘‘(B) The providing of beauty services to a 1
customer or client if the tipping of employees 2
providing such services is customary.’’. 3
(2) B
EAUTY SERVICE DEFINED .—Section 45B 4
of such Code is amended by adding at the end the 5
following new subsection: 6
‘‘(e) B
EAUTYSERVICE.—For purposes of this sec-7
tion, the term ‘beauty service’ means any of the following: 8
‘‘(1) Barbering and hair care. 9
‘‘(2) Nail care. 10
‘‘(3) Esthetics. 11
‘‘(4) Body and spa treatments.’’. 12
(b) C
REDITDETERMINEDWITHRESPECT TOMIN-13
IMUMWAGE INEFFECT.—Section 45B(b)(1)(B) of the 14
Internal Revenue Code of 1986 is amended— 15
(1) by striking ‘‘as in effect on January 1, 16
2007, and’’; and 17
(2) by inserting ‘‘, and in the case of food or 18
beverage establishments, as in effect on January 1, 19
2007’’ after ‘‘without regard to section 3(m) of such 20
Act’’. 21
(c) E
FFECTIVEDATE.—The amendments made by 22
this section shall apply to taxable years beginning after 23
December 31, 2024. 24
Æ
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