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HB 198

TAX/INCOME-INDIV/EXEMPT: Authorizes an income tax deduction for tip income earned by taxpayers at or below certain income levels (OR DECREASE GF RV See Note)

2025 Regular Session Introduced by Steven Jackson and 4 co-sponsors

Louisiana bill allowing lower-income service workers to deduct tip income from state taxes, reducing general fund revenue by unspecified amount.

Read by title, under the rules, referred to the Committee on Ways and Means.
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Bill Summary · HB 198

Legislative bill overview

HB 198 proposes to allow Louisiana taxpayers earning tips at or below specified income thresholds to deduct tip income from their state taxable income. The bill would reduce state general fund revenue by providing this targeted tax benefit to lower-income service workers who rely on tips as part of their compensation.

Why is this important

Tips represent a significant portion of income for workers in hospitality, food service, and other service industries, yet are subject to full state income taxation. This deduction could meaningfully reduce tax burdens for lower-wage workers while potentially encouraging service industry retention in Louisiana. However, it also reduces state revenue available for schools, healthcare, infrastructure, and other public services.

Potential points of contention

  • Revenue trade-off: The bill explicitly notes a decrease in General Fund revenue with no identified offset—state policymakers must decide if tax relief for service workers justifies reduced funding elsewhere
  • Income threshold ambiguity: The bill references "certain income levels" without specifying exact thresholds, leaving uncertainty about who qualifies and the ultimate fiscal impact
  • Fairness questions: Some may argue other low-income workers (retail, manufacturing, etc.) don't receive comparable deductions, while others may view service worker support as justified given tip income volatility and underreporting concerns

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

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