Sen. Ted Cruz introduces bill to make tips tax-free

Following the lead of former president Donald Trump, U.S. Senator Ted Cruz (R-Texas) introduces a new bill that would make tips exempt from federal taxes.

Cruz introduced the No Tax on Tips Act on Friday with Senators Rick Scott of Florida, Steve Daines of Montana and Kevin Cramer of North Dakota co-sponsoring it. 

The bill would exempt all tips, including those from credit and debit cards, from federal income taxes.

Under the bill, workers would deduct any income from tips on their yearly tax forms.


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The idea was floated by Republican nominee Donald Trump during a recent trip to Congress.

"This legislation is a common-sense pro-worker bill that will help families deal with the historic inflation caused by the Biden administration," said Cruz in a statement on Friday.

A similar bill was filed in the House by Representatives by Matt Gaetz of Florida and Thomas Massie of Kentucky earlier in the week.

Last week, the Committee for a Responsible Federal Budget, a nonprofit focused on federal spending, estimated that exempting tip money from taxes could lead to a decrease of at least $150 billion to $250 billion in federal revenue over ten years.