In a surprise move, the Senate passed the No Tax on Tips Act which would allow up to a $25,000 deduction for workers who typically receive tips.

A sizable tax break could be coming for tipped income, but the economic knock-on effects could be damaging.

Both the House and Senate versions are structured as deductions, not full exclusions of tips from taxable income. So, workers would still report their tips and claim the deduction when filing their taxes, rather than having tips automatically excluded from taxable income.