Bill > HB575

This bill introduces a new tax deduction for tipped employees in Hawaii, allowing them to deduct the total amount of tips they receive during a taxable year from their gross income. Specifically, the deduction applies to tips reported to the employer for Federal Insurance Contribution Act (FICA) purposes, which are defined as voluntary monetary contributions received from guests, patrons, or customers. The bill defines a "tipped employee" as someone who receives more than $30 per month in gratuities. The director of taxation will be responsible for creating the necessary forms for claiming this deduction and may require proof of the claimed tips. The tax deduction will take effect for taxable years beginning after December 31, 2025, which means it will first be applicable for the 2026 tax year. This legislation aims to provide financial relief for workers in service industries who rely on tips as a significant part of their income by reducing their tax burden.

Labor and Employment

https://www.capitol.hawaii.gov/session/measure_indiv.aspx?billtype=HB&billnumber=575&year=2026