Personal income taxes: unemployment insurance: tips.
Vote required
Majority
Fiscal committee
No
Appropriation
No
Current location
Revenue and Taxation
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Progress
Where this bill stands in the legislative process.
- Introduced
- Passed Assembly
- Passed Senate
- To Governor
- Became Law
Overview
This bill proposes to exclude tips, as defined, from gross income for personal income tax purposes and from the definition of wages paid for unemployment insurance and employment training tax. It also includes related changes to other provisions of the Revenue and Taxation and Unemployment Insurance Codes. The bill aims to provide individuals with more of their earnings and to improve the accuracy of tax withholding and unemployment insurance contributions. It will be effective for taxable years beginning on or after January 1, 2026, and before January 1, 2031.
Key provisions
- Excludes tips from gross income for personal income tax purposes.
- Excludes tips from the definition of wages paid for unemployment insurance and employment training tax.
- Adds a new section to the Revenue and Taxation Code regarding the exclusion of tips.
- Modifies Section 13009 to clarify the definition of ‘wages’ to include tips.
- Updates Section 13027 to align with the changes to the definition of wages.
- Adds a new section to the Unemployment Insurance Code regarding reporting of tips.
- Includes additional information requirements for tax expenditure authorizations.
- Modifies Section 18631 to update information reporting requirements.
Who is affected
- Individuals who receive tips.
- Employers who pay tips to employees.
- The California Franchise Tax Board.
- The Employment Development Department.
Bill text
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Sponsors
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1 on record
Primary sponsor
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