Personal income taxes: deductions: tips.
Vote required
Majority
Fiscal committee
No
Appropriation
No
Current location
Appropriations
Take action
Record your position on this measure.
Create an account to record your position, submit testimony, or contact your legislator.
Progress
Where this bill stands in the legislative process.
- Introduced
- Passed Senate
- Passed Assembly
- To Governor
- Became Law
Overview
This bill allows California taxpayers to deduct up to $20,000 of ‘qualified tips’ received during the taxable year from their adjusted gross income, beginning in 2026. To qualify, taxpayers must work in an occupation where they regularly receive over $20 per month in tips, not hold certain professional licenses, and have an adjusted gross income below $250,000 (head of household) or $125,000 (other individuals). The bill also includes requirements for record-keeping and reporting to the Franchise Tax Board, along with performance indicators to assess the deduction's impact on struggling workers.
Key provisions
- Allows a deduction of up to $20,000 for ‘qualified tips’ received.
- Defines ‘qualified taxpayer’ based on tip income, professional license status, and adjusted gross income.
- Specifies ‘qualified tips’ as tips from guests, patrons, or customers.
- Requires taxpayers to maintain records to substantiate the deduction.
- Establishes performance indicators for evaluating the deduction’s effectiveness.
- Sets a sunset date for the deduction of December 1, 2036.
- Includes reporting requirements for the Franchise Tax Board.
- Specifies exceptions to existing tax code sections regarding deductions.
Who is affected
- Taxpayers
- Individuals working in tipped occupations
- Small business owners in industries that rely on tipping
- Workers who receive regular tips
Notable changes
Bill text
Read the latest version inline or switch to a previous version.
Text extraction is in progress. View the official source.
Sponsors
Official sponsors from legislative records.
5 on record
Primary sponsor
Cosponsors
Arguments
Reasons offered for and against this legislation.
Arguments in favor
No arguments in favor have been submitted.
Submit yoursArguments opposed
No arguments opposed have been submitted.
Submit yours