Bill > HF164

This bill modifies Minnesota's tax laws to provide a tax exemption for tip income. Specifically, the bill creates a new subtraction for tips from individual income tax calculations and removes tip income from tax withholding requirements. Tips are defined as amounts that an individual reports to their employer as required by the Internal Revenue Code or amounts reported directly to the Internal Revenue Service as wages subject to employer taxes. The bill clarifies that tips reported in a written statement or those totaling less than $20 per month will be treated the same way. The changes will take effect for taxable years beginning after December 31, 2024, which means the new tax treatment will first apply to the 2025 tax year. This legislation aims to provide some tax relief for workers who earn tips, such as restaurant servers, bartenders, and other service industry employees, by reducing their tax burden on this form of income.