Bipartisan bill to created tax deduction of up to $25,000 now goes to House but experts have criticized measure

The US Senate passed the No Tax on Tips Act on Tuesday after the Nevada senator Jacky Rosen brought the bill up for a unanimous consent request.

The bipartisan bill will create a tax deduction of up to $25,000 for cash tips reported to employers by workers for withholding purposes on payroll taxes, with a cap on the salary for eligible workers at $160,000 annually.

Economists and labor advocates have criticized the legislation, with concerns it will incentivize the expansion of tipped work, undermine pay increases and would affect only a small segment of about 5% of low-paid workers who receive tips.