Gallego Introduces Bill to Ensure Auto-Gratuity is Covered by ‘No Tax on Tips’

Legislation comes as the Trump administration begins to implement new 'no tax on tips' provision

WASHINGTON - Today, Senator Ruben Gallego (D-AZ) introduced the No Tax on Large Party Tips Act to clarify that auto-gratuities and recommended tips, such as those added by restaurants when serving large parties, are covered by the 'no tax on tips' provision of the One Big Beautiful Bill Act.

"The Republicans' tax bill offers little relief to working Americans, and what relief it does offer - like no tax on tips - is shamefully short term. While no tax on tips expires in 2028, tax cuts for billionaires have no sunset. We must ensure that, while they last, as many workers as possible can benefits as much as possible," said Senator Gallego.

The No Tax on Large Party Tips Act would consider auto-gratuities cash tips for the purposes of the income tax deduction.

The full bill text can be found HERE.

Although only 3 percent of workers in the U.S. regularly receive tips, it is one of the few provisions in the so-called One Big Beautiful Bill that benefits working people. While nothing short of repealing the law could offset the harm Medicaid and food cuts will have on low-income workers, Senator Gallego aims to ensure workers can make the most of what they can in OBBB.

At the end of the day, OBBB sells out the working class to pay for tax cuts for billionaires. Senator Gallego believes our tax code should put working people first. That is why he supports the American Family Act to permanently expand the Child Tax Credit (CTC) for middle-class and low-income families and the Tax Cut for Workers Act to expand the Earned Income Tax Credit (EITC).Last week, he introduced theYou Earn It, You Keep It Actto eliminate federal taxes on Social Security benefits, without impacting the Social Security Trust Fund.

9/11/25