Republicans proposed offering a tax break to tipped workers, as part of a package of tax cuts the Senate Finance Committee unveiled Monday. GOP lawmakers are trying to pass their multitrillion-dollar megabill in coming weeks.

The Senate measure — which aims to fulfill a “no tax on tips” campaign pledge by President Donald Trump — is broadly similar to a provision that House GOP lawmakers passed in May as part of a domestic policy bill.

In both versions, the tax break is structured as a deduction available on qualified tips. The Senate legislation defines such tips as ones that are paid in cash, charged or received as part of a tip-sharing arrangement.

Taxpayers — both employees and independent contractors — would be able to claim it from 2025 through 2028. Filers could take advantage whether they itemize deductions on their tax returns or claim the standard deduction.

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Senate Republicans, like those in the House, would limit the tax break to tipped workers in occupations that “customarily and regularly” had received tips on or before December 31, 2024.

The bill text directs the U.S. Treasury Secretary to publish a list of those occupations within 90 days of the legislation’s enactment.

A “no tax on tips” proposal seems to have bipartisan appeal in the Senate, which unanimously passed a similar standalone measure last month. Former Vice President Kamala Harris also supported a tax break on tips during her 2024 presidential campaign.

However, the tax break wouldn’t benefit many workers, tax experts said.

There were roughly 4 million workers in tipped occupations in 2023, about 2.5% percent of all employment, according to an analysis last year by Ernie Tedeschi, director of economics at the Budget Lab at Yale and former chief economist at the White House Council of Economic Advisers during the Biden administration.

Additionally, a “meaningful share” of tipped workers already pay zero federal income tax, Tedeschi wrote. In other words, a proposal to exempt tips from federal tax wouldn’t help these individuals, who already don’t owe federal taxes.

“More than a third — 37 percent — of tipped workers had incomes low enough that they faced no federal income tax in 2022, even before accounting for tax credits,” Tedeschi wrote. “For non-tipped occupations, the equivalent share was only 16 percent.”

Tax deductions reduce the amount of income subject to tax (or, taxable income) and are generally more valuable for high-income taxpayers relative to tax credits.

The Economic Policy Institute, a left-leaning think tank, said it believed a better way to help workers would be to raise the federal minimum wage.

A “no tax on tips” provision “gives the illusion of helping lower-income workers — while the rest of the legislation hands huge giveaways to the rich at the expense of the working class,” EPI economic analysts wrote Thursday.

Not unlike a 529 college savings plan, Trump accounts come with a tax incentive. Earnings grow tax-deferred, and qualified withdrawals are taxed as long-term capital gains.

Under both the House and Senate versions of the bill, withdrawals could begin at age 18, at which point account holders can tap up to half of the funds for education expenses or credentials, the down payment on a first home or as capital to start a small business.

At 25, account holders can use the full balance for expenses that fall under those same guidelines and at 30, they can use the money for any reason. Distributions taken for qualified purposes are taxed at the long-term capital-gains rate, while distributions for any other purpose are taxed as ordinary income.

For children born between January 1, 2024, and December 31, 2028, the federal government will deposit $1,000 into the Trump account, funded by the Department of the Treasury, as part of a “newborn pilot program,” according to the Senate Finance Committee’s proposed text released on Monday.

To be eligible to receive the initial seed money, a child must be a U.S. citizen at birth and both parents must have Social Security numbers.

If a parent or guardian does not open an account, the Secretary of Treasury will establish an account on the child’s behalf. Parents may also opt out.

The White House and Republican lawmakers have said these accounts will introduce more Americans to wealth-building opportunities and the benefits of compound growth. But some experts say the Trump accounts are also overly complicated, making it harder to reach lower-income families.

Universal savings accounts, with fewer strings attached, would be a simpler alternative proposal at a lower price tag, according to Adam Michel, director of tax policy studies at the Cato Institute, a public policy think tank.

“I’m disappointed the Senate did not take the opportunity to improve these accounts,” Michel said. Still, “provisions that remain in both the House and Senate text, we should expect them to become law, and this provision fits that criteria.” 

Mark Higgins, senior vice president at Index Fund Advisors and author of “Investing in U.S. Financial History: Understanding the Past to Forecast the Future,” said the key is “if the benefits comfortably exceed the cost.”

According to the Committee for a Responsible Federal Budget, Trump accounts would add $17 billion to the deficit over the next decade.

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One provision in Republicans’ “big beautiful” bill would narrow the relief options for struggling student loan borrowers. House and Senate Republicans both call for the elimination of both the economic hardship and unemployment deferment.

Those deferments allow federal student loan borrowers to pause their monthly bills during periods of joblessness or other financial setbacks, often without interest accruing on their debt.

Less attention has been paid to the GOP plan to do away with the deferments than its proposals to eliminate several student loan repayment plans and to establish a minimum monthly payment for borrowers.

The House advanced its version of the One Big Beautiful Bill Act in May. The Senate Committee on Health, Education, Labor and Pensions released its budget bill recommendations related to student loans on June 10. Senate lawmakers are preparing to debate the massive tax and spending package.

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Nixing the deferments could have major consequences, said Abby Shafroth, director of the National Consumer Law Center’s Student Loan Borrower Assistance Project.

“I’m concerned this is going to lead more people to default on their student loans when they encounter a job loss, surprise medical expense or other economic hardship,” Shafroth said.

The Trump administration said this spring that the number of student loan borrowers in default could soon rise from more than 5 million to roughly 10 million in the coming months.

Under the Senate Republicans’ proposal, student loans received on or after July 1, 2026 would no longer qualify for the unemployment deferment or economic hardship deferment. The House plan does away with both deferments a year earlier, on July 1, 2025.

The unemployment deferment is typically available to student loan borrowers who are seeking but unable to find full-time employment or are eligible for jobless benefits, among other requirements, according to the National Consumer Law Center. Under the deferment, borrowers can pause their payments for up to six months at a time, and for a total of three years over the life of the loan.

The absence of the relief “means that for someone who lost their job and is struggling to keep their head above water, the government will demand monthly payments on student loans,” Shafroth said.

The bill comes as the share of entry-level employees who report feeling positive about their employers’ business prospects dropped to around 43% in May, a record low, according to a recent report by Glassdoor.

The economic hardship deferment, meanwhile, is generally available to student loan borrowers who receive public assistance, earn below a certain income threshold or work in the Peace Corps. The total time a borrower can spend in an economic hardship deferment is also three years.

The end of the deferments “eliminates one of the key benefits on subsidized loans,” said higher education expert Mark Kantrowitz.

Persis Yu, deputy executive director of the Student Borrower Protection Center, agreed.

“The ability of borrowers to pause payments and interest on subsidized loans during financial shocks and hardship is a critical benefit of the federal loan program,” Yu said.

Around 150,000 federal student loan holders were enrolled in the unemployment deferment in the second quarter of 2025, while around 70,000 borrowers had qualified for an economic hardship deferment, according to data by the U.S. Department of Education.

The absence of the deferments will push more federal student loan borrowers into a forbearance, experts say, during which interest continues to climb on their debt and borrowers often resume repayment with a larger bill.

Republicans say doing away with the payment pauses will encourage borrowers to enroll in repayment plan they can afford.

Sen. Bill Cassidy, R-La., chair of the Senate Health, Education, Labor, and Pensions Committee, said in a statement on June 10, that his party’s proposals would stop requiring that taxpayers who didn’t go to college foot the loan payments for those with degrees.

“Biden and Democrats unfairly attempted to shift student debt onto taxpayers that chose not to go to college,” Cassidy said.

Cassidy said the higher education legislation, which also stretches out student loan repayment timelines, would save taxpayers at least $300 billion.