Democrats let 'no tax on tips' pass the Senate. That doesn't mean they actually back Trump's campaign promise.

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Sen. Elizabeth Warren

"No tax on tips makes a great headline," Sen. Elizabeth Warren told BI. "The devil is in the details." Tom Williams/CQ-Roll Call via Getty Images
  • A "No Tax on Tips" bill passed the Senate on Tuesday with no Democratic opposition.
  • This was one of Trump's key economic campaign promises.
  • But several Democrats told BI that they still had questions about the proposal.

A bipartisan bill to exempt tips from federal income tax passed the Senate. That doesn't mean everyone's fully behind the idea, which was one of President Donald Trump's key campaign promises.

In fact, lawmakers on both sides of the aisle are surprised that the "No Tax on Tips Act," a bipartisan bill sponsored by Republican Sen. Ted Cruz of Texas and Democratic Sen. Jacky Rosen of Nevada, passed at all.

"I'm a little amazed the Democrats didn't block it," Cruz told BI. "But I'll take yes for an answer."

As it turns out, Cruz's surprise is warranted. While no Democratic senators said they were outright opposed, several told BI on Wednesday that they still had questions or concerns about the idea, or were simply ambivalent about it.

"That's one way to approach the topic," Democratic Sen. Tim Kaine of Virginia. "The other way is to raise the minimum wage, and sort of eliminate a tip-based economy, which is what a lot of countries do."

"It's obviously great for people who make their incomes off of tips. It's just a question of fairness," Democratic Sen. Chris Murphy of Connecticut said. "It just, on its own, seems to be a little strange to decide that certain workers are getting taxed at a rate that's much less than other workers."

The bill passed on Tuesday night after Rosen made a "unanimous consent request," a procedure that senators can use either to pass non-controversial legislation or highlight the other party's opposition to one of their bills. If no senator shows up to object, it passes.

Senators are notified about these requests ahead of time, giving them plenty of time to prepare to object. But no one in either party did so, despite some expectation that Republicans would, given that their own version of the proposal is included in the "One Big Beautiful Bill" reconciliation package.

"Frankly, I was surprised," Murphy said, adding that he assumed a member of the Senate Finance Committee would "object to something that big going outside of regular order."

'I haven't studied the full implications'

The No Tax on Tips Act would allow tipped workers to claim a tax deduction of up to $25,000 for the sum of all tips they earned in the previous year. The GOP's "Big Beautiful Bill" includes a similar provision, but without the $25,000 cap.

For Rosen, passing the bill was smart politics. Her home state of Nevada has among the highest concentrations of tipped workers in the country, owing to the hospitality and entertainment industry in cities like Las Vegas.

The senator also wanted to divorce the issue from the GOP's broader bill, which includes safety-net cuts that Democrats oppose.

"Our office ran a hotline on both sides of the aisle and, after seeing no objections, Senator Rosen went to the floor to pass this bipartisan bill by itself and without any poison pills," a spokesperson for Rosen told BI. "In doing so, Senate Democrats are showing we can deliver tax relief for working-class families without Republicans' extreme cuts to Medicaid and SNAP."

Democratic Sens. Jacky Rosen and Catherine Cortez Masto

Democratic Sens. Jacky Rosen and Catherine Cortez Masto both support the bill, owing to Nevada's concentration of tipped workers. Andrew Caballero-Reynolds / AFP via Getty Images

Senate Minority Leader Chuck Schumer applauded the passage of the bill on Tuesday, saying in a statement that "thanks to Senator Rosen's incredible leadership, we are one step closer to eliminating taxes on tipped wages for hardworking Americans."

But while the bill has the support of Republicans and Nevada's other Democratic senator, Catherine Cortez Masto, none of the Democratic senators who BI spoke with on Wednesday said they were fully supportive of the idea.

"I haven't studied the full implications," said Sen. Bernie Sanders, an independent who caucuses with Democrats. "I fear very much that corporations may be able to use it in certain ways."

"It's not the worst element of this bill, though," Sanders added.

"No tax on tips makes a great headline, but if it's not done the right way, it fails to help hardworking people who are barely scraping by, while it gives one more boost to Wall Streeters who change their compensation to tipped income," Sen. Elizabeth Warren of Massachusetts said. "So, like so many things, the devil is in the details."

Rosen's bill does include a provision to prevent the wealthy from doing what Warren suggests, barring those who earn more than $160,000 a year from claiming the deduction.

Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee and a key voice within the party on tax policy, declined to comment specifically on the no tax on tips proposal, only saying that Democrats as a whole want to find ways to help workers.

"I strongly favor getting relief to the workers," Wyden said. "But we know we have a lot of legislative hoops to jump through."

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