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HB 22

PROHIBIT CREDIT CARD FEE TIP DEDUCTIONS

2025 Regular Session Introduced by Art De La Cruz and 4 co-sponsors

HB 22 eliminates tax deductions for credit card processing fees on tip transactions, requiring businesses to absorb these costs without offsetting tax benefits.

action postponed indefinitely
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Bill Summary · HB 22

Legislative bill overview

HB 22 would prohibit businesses from deducting credit card processing fees associated with tip transactions as a business expense for tax purposes. The bill targets the practice where merchants process tips through credit cards and then claim the associated fees as tax deductions, effectively shifting a portion of the cost burden to the government through reduced tax revenue.

Why is this important

Tip processing has become increasingly common as digital payment systems dominate, and credit card companies charge merchants 2-4% fees on all transactions including tips. This bill addresses whether taxpayers should subsidize businesses' payment processing costs through foregone tax revenue, while also potentially affecting how tips are economically distributed between workers, businesses, and payment processors.

Potential points of contention

  • Small business impact: Independent restaurants, bars, and service providers argue this disproportionately affects small businesses with thin profit margins that rely on credit card processing
  • Tip worker consequences: Opponents worry reduced business deductions could lead merchants to pass costs to workers through lower wages or reduced tip-sharing policies
  • Tax policy precedent: Supporters of the bill contend businesses shouldn't get tax breaks for costs inherent to accepting modern payment methods, while opponents argue it's a legitimate business expense like any other payment processing

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

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