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Bill

HB 209

Exempt tips from state, municipal, school district income taxes

136th Legislature (2025-2026) Introduced by Sean Brennan and 6 co-sponsors

Ohio bill would exempt all tips from state, municipal, and school district income taxes, increasing service workers' take-home pay but reducing government tax revenue.

Referred to committee
#taxation
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Bill Summary · HB 209

Legislative bill overview

HB 209 would exempt tips from state, municipal, and school district income taxes in Ohio. This means workers who receive tips would not pay income tax on those earnings, though federal tax obligations would remain unchanged.

Why is this important

Service industry workers, particularly restaurant servers, bartenders, and hospitality staff, often rely heavily on tips as a significant portion of their income. This exemption could increase take-home pay for these workers while reducing tax revenue for the state and local governments that depend on income tax collections.

Potential points of contention

  • Revenue impact: Removing tips from the tax base would reduce funding for state operations, municipal services, and school districts, potentially requiring budget adjustments or alternative revenue sources
  • Equity concerns: This exemption benefits primarily service industry workers while other lower-income workers remain fully subject to income tax, raising fairness questions
  • Enforcement complexity: Distinguishing between tips and wages in employer reporting systems and ensuring compliance could create administrative challenges
  • Economic justification: Proponents may argue workers deserve relief; opponents may question whether targeted tax cuts are the best use of foregone revenue

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

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