Bill > HB4051

This bill amends Michigan's income tax law by adding a new provision that allows tipped employees to deduct gratuities from their taxable income starting in tax years beginning on or after January 1, 2025. Specifically, tipped employees can deduct proven gratuities that are reported to their employer for federal insurance contributions act (FICA) purposes. A tipped employee is defined as someone who regularly receives more than $30.00 per month in tips or voluntary monetary contributions from guests, patrons, or customers. Gratuities are those tips or voluntary monetary contributions that the employee reports to their employer. The bill aims to provide tax relief for workers in service industries who earn a significant portion of their income through tips, recognizing the importance of these earnings to employees in sectors like restaurants, hospitality, and other service-based businesses. By allowing these gratuities to be deducted from taxable income, the bill effectively reduces the tax burden on tipped workers, potentially providing some financial benefit to employees who rely on tips as a substantial part of their compensation.

Budget and Finance

https://legislature.mi.gov/Bills/Bill?ObjectName=2025-HB-4051