SB 129, the “No Tax on Tips Act,” would create a new federal income tax deduction for “qualified tips” received by workers in occupations that traditionally and customarily receive tips. The deduction would be available to all individual taxpayers, including non-itemizers, and would be capped at $25,000 per taxpayer per year. The bill directs the Treasury Department to publish a list of qualifying tipped occupations and applies the deduction to taxable years beginning after December 31, 2024.
The bill also amends related tax provisions so the tip deduction is not limited by itemized-deduction rules or the overall limitation on itemized deductions, and it requires Treasury to adjust withholding tables and procedures to reflect the new deduction. In addition to the tip-income deduction, the bill expands the existing employer payroll tax credit for tips under section 45B to include beauty service establishments, defining beauty services to include barbering and hair care, nail care, esthetics, and body and spa treatments. It also clarifies how the credit is calculated for certain food and beverage establishments.
In practical terms, the bill would reduce federal income tax liability for tipped workers and extend a tax benefit to employers in the beauty-services sector. It would also require administrative implementation by Treasury, including defining eligible tipped occupations and updating withholding guidance. The bill amends several sections of the Internal Revenue Code, including sections 63, 67, 68, 3402, and 45B.
The available context shows generally favorable treatment in the Senate, as the bill passed the Senate on May 20, 2025. However, the bill was later “held at the desk,” indicating it did not advance further in the available legislative history. No committee transcripts or recorded votes were provided, so there is no detailed public record here of debate or amendments.
Because no discussion transcripts are available, specific points of contention cannot be identified from the provided materials. Based on the text alone, likely policy issues include the scope of occupations that qualify as traditionally tipped, the $25,000 cap, the exclusion for higher-compensated employees, and the expansion of the employer tip credit to beauty services. These provisions would most directly affect tipped workers, employers in hospitality and personal care industries, and Treasury administration.
The bill would amend the Internal Revenue Code to add a new deduction for qualified tips, make that deduction available to both itemizers and non-itemizers, exempt it from certain itemized-deduction limitations, and require Treasury to adjust withholding rules. It would also expand the section 45B employer tip credit to beauty service businesses and define those services in statute. The affected parties would include tipped employees, employers in food service and beauty industries, and the IRS/Treasury Department responsible for implementation.
The limited legislative history suggests the bill was viewed positively enough to pass the Senate, indicating support for tax relief for tipped workers and related businesses. At the same time, the absence of committee records or votes in the provided context means there is no detailed evidence of bipartisan agreement or opposition. The fact that the bill was later held at the desk suggests it did not complete the legislative process despite Senate passage.
No committee debate or vote breakdown is available in the provided record, so no specific objections are documented. Based on the bill text, the most likely areas of disagreement are the definition of qualifying tipped occupations, the exclusion of certain higher-paid employees, the $25,000 deduction cap, and whether the employer tip credit should extend to beauty services such as salons, nail care, and spa treatments. These issues would primarily concern tax policy makers, employers, and workers in tipped and service occupations.