Green’s Dictionary of Slang

(US black) a good and energetic dancer.

1922		Appleton Post-Crescent (WI) 11 May 13/4: Flapper Dictionary rug shaker – A girl addicted to shimmying.
1935		Chicago Defender 19 Oct. 14/3: Psychic aspects of rugcutting: – Herein we have no intention of presenting the sociological side of the engrossing art of ‘cutting rugs,’(i.e. any type of dancing in which much sweat exudes and little is added to the purse.) ... Evidently devotees of rugcutting let their minds go blank once they hit the hardwoods of the dance floor.
1936		Lil Johnson [song title] Rug Cutter’s Function.
1942		Amer. Mercury July 96: rug-cutter: originally a person frequenting house-rent parties, cutting up the rugs with his feet; a person too cheap or poor to patronize regular dance halls; now means a good dancer.
1947		S. Lewis Kingsblood Royal (2001) 292: The white folks are disgusted with these rug-cutters and slick-chicks that try to act like they’re the same as white folks.
1953		L. Durst Jives of Dr. Hepcat (1989) 8: He shouted on the stroll where the riff masters whispered to the bug to get out of the rug because they were going to jam and jive for rugcutters holiday.
2002		‘Touré’ Portable Promised Land (ms.) 156: We Words (My Favorite Things) [...] Rugcutter. Cocksucker. Showstopper. Hotstepper.