Bill > HB520

This bill proposes to exclude tips received by employees from state income tax calculations in Hawaii, beginning with taxable years after December 31, 2025. Specifically, the bill defines "tips" as gratuities or voluntary monetary contributions received by an employee from guests, patrons, or customers that are reported to the employer for federal tax purposes. To qualify, an employee must receive more than $30 per month in tips. The bill aims to support local small businesses by helping them attract qualified employees and follows a growing movement at the federal level to provide tax relief for tipped workers. The Director of Taxation will be responsible for preparing necessary forms, potentially requiring evidence from taxpayers, and adopting rules to implement this tax exclusion. The legislature believes this measure will provide financial benefits to employees in tip-based occupations, such as restaurant workers, servers, and other service industry professionals, by reducing their state tax burden on tip income.

Labor and Employment

https://www.capitol.hawaii.gov/session/measure_indiv.aspx?billtype=HB&billnumber=520&year=2025