Bill > HB198

This bill introduces a new tax deduction specifically for tip income earned by Louisiana residents, designed to provide financial relief for workers in service industries who receive tips as part of their compensation. The legislation allows taxpayers to deduct a percentage of their tip income from their tax table income, with the deduction percentage varying based on the taxpayer's adjusted gross income and filing status. For single, head of household, or married-filing-separately taxpayers, the deduction ranges from 100% of tip income for those earning $61,000 or less, gradually reducing to 0% for those earning over $65,000. Similarly, for married-filing-jointly or qualifying surviving spouse filers, the deduction ranges from 100% of tip income for those earning $122,000 or less, reducing to 0% for those earning over $130,000. Tips from multiple sources can be included, such as those reported on IRS Form W-2 as "social security tips" and "allocated tips," as well as cash and charge tips reported on Form 4137. The bill specifies that this tax deduction will become effective for taxable periods beginning on or after January 1, 2026, and will automatically terminate if federal tax laws change to eliminate taxation on tip income.