Bill > HF1221

This bill proposes to exempt tip income from individual income tax and tax withholding requirements in Minnesota, starting from taxable years beginning after December 31, 2024. Specifically, the bill defines "tips" as amounts an individual reports to their employer as required by federal tax law or reports to the Internal Revenue Service as wages subject to employer taxes. The legislation creates a new subtraction for tip income when calculating individual income tax, meaning these earnings will not be included in an individual's taxable income. Additionally, the bill removes existing provisions related to tax withholding on tips, effectively eliminating the requirement for employers to withhold taxes on tip income. This change aims to provide financial relief to workers in industries where tipping is common, such as restaurants, hospitality, and personal services, by allowing them to keep the full amount of their tips without tax deductions. The bill modifies two sections of Minnesota tax statutes to implement these changes, with a clear effective date specified to provide certainty for taxpayers and employers.

Budget and Finance

https://www.revisor.mn.gov/bills/bill.php?b=House&f=HF1221&ssn=0&y=2025