Bill > HB1005

This bill creates a state income tax subtraction modification for tips and gratuities received in specific service industries in Maryland. Specifically, the bill allows workers to subtract from their state income tax any compensation received as tips or gratuities while working in food service facilities, businesses licensed to serve alcohol, hotels, passenger-for-hire services (such as limousine or transportation network services), and taxicab services. The bill defines these terms precisely, referencing existing Maryland legal definitions and statutes. For instance, a "food service facility" is defined according to the Health-General Article, and passenger-for-hire and taxicab services are defined by reference to the Public Utilities Article. The tax exemption will apply to taxable years beginning after December 31, 2024, with the law taking effect on July 1, 2025. By creating this subtraction modification, the bill aims to provide tax relief for service workers who rely significantly on tips as part of their income, potentially making these jobs more financially attractive and supporting workers in industries known for lower base wages.

Budget and Finance

https://mgaleg.maryland.gov/mgawebsite/Legislation/Details/HB1005?ys=2025RS