SB 984
Personal Income Tax Law: deductions: tips.
Vote required
Majority
Fiscal committee
No
Appropriation
No
Current location
Appropriations
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- Passed Assembly
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Bill overview
This bill conforms California’s personal income tax laws to federal tax law regarding deductions for ‘qualified tips.’ Specifically, it allows taxpayers to deduct amounts equal to their qualified tips, as defined by the IRS, for taxable years beginning on or after January 1, 2026, and before January 1, 2029. The bill also includes requirements for reporting and data collection related to this deduction.
Key provisions
- Allows deductions for ‘qualified tips’ as defined by federal law.
- Applies to taxable years beginning on or after January 1, 2026, and before January 1, 2029.
- Replaces ‘secretary’ with ‘Franchise Tax Board’ in relevant sections.
- Includes specific goals and performance indicators for the deduction.
- Requires the Franchise Tax Board to submit a report to the Legislature detailing tip deductions.
- Sets a deadline for the report submission (December 1, 2029).
- The section is set to expire on December 1, 2029.
Who is affected
- Taxpayers
- California residents
- The Franchise Tax Board
Notable changes
- Conforms California tax law to federal tax law regarding qualified tips.
- Introduces reporting requirements and performance indicators for the tip deduction.
Sponsors
Official sponsors from legislative records.
Primary sponsor
Cosponsors
Arguments in favor
Reasons to support this legislation.
No arguments in favor have been submitted.
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SB984:v98#DOCUMENT
Bill Start
| Amended IN Senate April 29, 2026 |
CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION
Senate Bill
No. 984
| Introduced by Senators Ochoa Bogh and Grove (Coauthors: Senators Alvarado-Gil, Choi, Dahle, Hurtado, Jones, Seyarto, Strickland, and Valladares) (Coauthors: Assembly Members Alanis, Castillo, Davies, Hadwick, Hoover, Lackey, Patterson, and Tangipa) |
| February 05, 2026 |
An act to add and repeal Section 17201.8 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
SB 984, as amended, Ochoa Bogh. Personal Income Tax Law: deductions: tips.
The Personal Income Tax Law, in modified conformity with federal income tax laws, allows various deductions in calculating taxable income. Existing federal income tax law, for taxable years beginning before January 1, 2029, allows deductions in determining taxable income, as defined, for amounts equal to the qualified tips, as defined.
This bill, for taxable years beginning on or after January 1, 2026, and before January 1, 2029, would conform to federal income tax law with regard to qualified tips. tips, except as provided.
Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.
This bill also would include additional information required for any bill authorizing a new tax expenditure.
This bill would take effect immediately as a tax levy.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO
Bill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 17201.8 is added to the Revenue and Taxation Code, to read:
17201.8.
(a) For taxable years beginning on or after January 1, 2026, and before January 1, 2029, Section 224 of the Internal Revenue Code, relating to qualified tips, as it read on January 1, 2026, shall apply, except that in subsection (g) thereof the term “secretary” shall be replaced by the term “Franchise Tax Board.” except that Section 224(e) of the Internal Revenue Code, relating to social security number required, shall not apply.
(b) (1) For purposes of complying with Section 41, the Legislature finds and declares the following:
(A) The specific goal of the deduction provided by this section is to help workers retain more of their earnings.
(B) The performance indicators for the Legislature to use in determining whether the deduction achieves its goal shall be the number of taxpayers deducting tips from income pursuant to this section, and the average dollar value amount of those amounts deducted from income.
(2) (A) The Franchise Tax Board, no later than December 1, 2029, shall submit a report to the Legislature, in compliance with Section 9795 of the Government Code, detailing the number of taxpayers deducting tips from income under this section and the average dollar value of those amounts deducted.
(B) The disclosure provisions of this paragraph shall be treated as an exception to Section 19542.
(c) This section shall remain operative only until December 1, 2029, and as of that date is repealed.
SEC. 2.
This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.