Bill > HB575

This bill creates a new tax deduction for tipped employees in Hawaii, allowing workers who receive more than $30 per month in gratuities to deduct their reported tips from their gross income. Specifically, the deduction would apply to tips that are reported to the employer for purposes of the Federal Insurance Contribution Act (FICA), which covers Social Security and Medicare taxes. The bill defines "tips" as voluntary monetary contributions received from guests, patrons, or customers, and a "tipped employee" as someone who earns more than $30 monthly in gratuities. The director of taxation will be responsible for creating the necessary forms for claiming this deduction and may require proof of the tips claimed. The tax deduction will become applicable for taxable years beginning after December 31, 2025, giving employers and employees time to prepare for the new tax provision. This legislation aims to provide financial relief for workers in service industries who rely on tips as a significant part of their income.

Labor and Employment

https://www.capitol.hawaii.gov/session/measure_indiv.aspx?billtype=HB&billnumber=575&year=2025