Bill > AB38

This bill creates a new income tax exemption for cash tips received by employees directly from their employer's customers in Wisconsin. The legislation modifies several sections of the state tax code to remove references to tips when calculating taxable income, effectively ensuring that cash tips will not be counted as taxable income for state tax purposes. Specifically, the bill adds a new provision to the state statutes that explicitly exempts cash tips from taxation and removes previous language that included tips in various income calculations for residents and non-residents. The tax exemption will first apply to taxable years beginning after December 31, 2024, which means taxpayers will first be able to take advantage of this exemption when filing their 2025 state income taxes. This bill aims to provide financial relief to service industry workers by allowing them to keep the full amount of their cash tips without additional tax burden, potentially increasing take-home pay for employees in sectors like restaurants, bars, and other service-based industries where tipping is common.

Budget and Finance

https://docs.legis.wisconsin.gov/2025/proposals/reg/asm/bill/ab38