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HB 5728

AN ACT ESTABLISHING A PERSONAL INCOME TAX DEDUCTION FOR TIPS OR GRATUITIES.

2025 Regular Session Introduced by Seth Bronko

Connecticut bill proposes tax deduction for tips to reduce income tax burden on service industry workers relying on gratuity income.

REF. TO JOINT COMM. ON Finance, Revenue and Bonding
#gratuities #incometaxdeductions(state)
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Bill Summary · HB 5728

Legislative bill overview

HB 5728 would create a personal income tax deduction for tips and gratuities received by workers in Connecticut. This means individuals who receive tips as part of their compensation could deduct those amounts from their taxable income, reducing their state tax liability. The bill is currently in the early legislative stage, having been referred to the Joint Committee on Finance, Revenue and Bonding.

Why is this important

Tips represent significant income for service industry workers—servers, bartenders, delivery drivers, and others—yet are often inconsistently reported and taxed. This deduction could provide meaningful tax relief to workers in lower-income brackets who rely heavily on tip income. Conversely, the policy would reduce state tax revenue, raising questions about how Connecticut would offset the lost income.

Potential points of contention

  • Revenue impact: Removing tips from the taxable income base reduces state revenue; lawmakers would need to identify offsetting revenue sources or spending cuts
  • Fairness questions: This benefits tip-dependent workers but not salaried or hourly workers without tip income, potentially raising equity concerns about whose income is tax-deductible
  • Implementation complexity: Determining what qualifies as a tip, preventing abuse, and tracking tip income for tax purposes could create administrative challenges for both workers and the state

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

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