WeVote
Log In

Bill

Bill

HF 293

A bill for an act exempting cash tips from the individual income tax, and including applicability provisions.

2025-2026 Regular Session Introduced by Dave Jacoby

HF 293 exempts cash tips from state income tax, benefiting service workers by increasing their take-home pay, effective for tax years starting January 1, 2026.

Introduced, referred to Ways and Means.
#incometaxes #salariesandwages #taxexemptions
0
WeVote Research Nonpartisan
Bill Summary · HF 293

Summary of Bill HF 293

Bill Overview

  • Bill Number: HF 293
  • Title: A bill for an act exempting cash tips from the individual income tax, and including applicability provisions.
  • Status: Introduced, referred to Ways and Means.
  • Introduced Date: February 10, 2025
  • Classification: Bill
  • Subject Areas: Income taxes, salaries and wages, tax exemptions

Purpose and Intent

The primary purpose of HF 293 is to exempt cash tips received by individuals from being subject to individual income tax. This legislation aims to alleviate the tax burden on workers who rely on tips as a significant part of their income, particularly in service industries such as hospitality and food service.

Key Provisions

  • Amendment to Section 422.7: The bill proposes an amendment to the existing tax code (Code 2025) by adding a new subsection (45). This subsection allows individuals to subtract the amount of cash tips received from their taxable income, provided these tips are reported to employers as required by federal law (specifically, Section 6053(a) of the Internal Revenue Code).

  • Applicability: The provisions of this bill will apply to tax years beginning on or after January 1, 2026. This means that individuals will not be able to claim this exemption for the tax year 2025.

Impact

  • Who is Affected: The bill primarily impacts workers in industries where cash tipping is common, such as restaurant servers, bartenders, and other service personnel. By exempting cash tips from income tax, these workers may see an increase in their take-home pay.

  • Potential Financial Implications: While the exact financial impact on state revenue is not detailed in the bill, exempting cash tips from taxation could lead to a decrease in tax revenue collected from individuals who earn tips. This could affect state funding for various programs and services.

Legislative Process

  • Current Status: As of the introduction date, HF 293 has been referred to the Ways and Means Committee for further consideration. The bill will undergo discussions and potential amendments before it can be voted on by the full legislature.

Conclusion

HF 293 seeks to provide financial relief to individuals who earn cash tips by exempting these earnings from state income tax. If passed, the bill would take effect for the 2026 tax year, potentially benefiting many workers in the service industry. The bill is currently under review by the Ways and Means Committee.

Compiled from official sources — confirm details with the bill’s official record.

Sign in to ask a question.