WACO, Texas (KXXV) — Service industry workers may soon take home more in cash tips after the "No Tax on Tips" Act passed the Senate last week.
The bill, which passed unanimously without amendment, would exempt cash tips from federal income tax by allowing taxpayers to claim a 100% deduction at filing for tipped wages.
Central Texas hair stylist Peyton Wood is excited about the potential change.
"We're finally being heard kind of thing, where I just never understood the tax on tips anyways because to me a tip is a thank you, a generous kind of thing. I don't see how it can be a part of like an hourly pay where like it has to be taxed," Wood said.
For Wood, who says she loves making others feel beautiful, tips can make up nearly a quarter of her income during certain months.
"I like to say I picked an expensive career. Cause it can get pricey, but I like making people feel good about themselves, so I honestly wouldn't change it for the world," Wood said.
She explained that the rising cost of supplies and other expenses has made her profession challenging.
"I use it more so I look at it more so to help us like in my business and not so much outside of my business, but it does help like either way, it's gonna help a lot more," Wood said.
The tax deduction would be up to $25,000 and is limited to workers who earn $160,000 or less in 2025.
The proposed deduction would expire in four years if it's not made permanent.
The legislation is part of President Trump's "One Big Beautiful Bill Act" to fulfill various campaign promises ranging from taxes to border security.
While the bill has passed in the Senate, it has yet to come up for a vote in the House of Representatives. If it passes the House, it will head to the President to be signed into law.
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