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HB 1416

Income tax; exclude tips from taxation

2025-2026 Regular Session Introduced by Carter Barrett and 4 co-sponsors

Georgia bill excludes tips from state income taxation, increasing service workers' net pay while reducing state tax revenue and potentially creating tax equity and compliance issues.

House Second Readers
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Bill Summary · HB 1416

Legislative bill overview

HB 1416 proposes to exclude tips from taxable income in Georgia, meaning workers would not pay state income tax on gratuities they receive. This would apply to tips received in cash or through other payment methods across all service industries.

Why is this important

Tips represent a significant portion of income for millions of service workers in restaurants, hospitality, and other industries. Excluding tips from state taxation would increase take-home pay for these workers and could affect Georgia's state revenue, though the fiscal impact would depend on the prevalence of tip income in the state's workforce.

Potential points of contention

  • Revenue impact: The bill would reduce state tax collections, requiring either budget cuts elsewhere, increased taxes on other income sources, or identification of alternative revenue streams
  • Equity concerns: Critics may argue this creates preferential tax treatment for tip-earners compared to salaried workers earning similar amounts, raising fairness questions
  • Implementation complexity: Distinguishing tips from regular wages for tax purposes could create administrative challenges for employers, workers, and tax authorities during reporting and compliance
  • Federal coordination: Since federal law still taxes tips as income, Georgia's separate exclusion could create compliance confusion and misalignment between state and federal obligations

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

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