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Bill > HF1030
IA HF1030
IA HF1030A bill for an act exempting qualified tips from the individual income tax, and including applicability provisions.(Formerly HF 268.)
summary
Introduced
04/17/2025
04/17/2025
In Committee
05/15/2025
05/15/2025
Crossed Over
Passed
Dead
Introduced Session
91st General Assembly
Bill Summary
This bill excludes certain qualified tips from the calculation of net income for purposes of the individual income tax. An individual whose net income is less than $155,000, without regard to any deduction of qualified tips the individual received, is eligible to exclude up to $25,000 of such tips from the calculations of net income. The bill defines “qualified tips” to mean any cash tip received by an individual in the course of such individual’s employment in an occupation that customarily received cash tips prior to December 31, 2023. The department of revenue is required to adopt rules to administer the bill. The bill applies in tax years beginning on or after January 1, 2026, in the tax years where the federal government has not enacted similar legislation allowing for the deduction of qualified tips for purposes of the federal income tax.
AI Summary
This bill introduces a new tax exemption for service industry workers by allowing individuals with a net income below $155,000 to subtract up to $25,000 of qualified tips from their state income tax calculation. "Qualified tips" are specifically defined as cash tips received in occupations that traditionally received cash tips before December 31, 2023, such as restaurants, bars, and other service-based industries. The tips must be documented on statements provided to employers as required by federal tax law. The Iowa Department of Revenue is mandated to create rules for implementing this exemption. Importantly, the bill is contingent on federal legislation and will only apply to tax years beginning on or after January 1, 2026, unless the federal government enacts similar legislation allowing tip deductions for federal income tax purposes, in which case this state-level exemption would not apply for that same tax year. This bill aims to provide financial relief for service workers by reducing their state tax burden on tip income.
Committee Categories
Budget and Finance
Sponsors (0)
No sponsors listed
Other Sponsors (1)
Ways and Means (House)
Last Action
Rereferred to Ways and Means. H.J. 1222. (on 05/15/2025)
Official Document
bill text
bill summary
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bill summary
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bill summary
| Document Type | Source Location |
|---|---|
| State Bill Page | https://www.legis.iowa.gov/legislation/BillBook?ga=91&ba=HF1030 |
| Fiscal Note - Exemption from Income Tax, Tips | https://www.legis.iowa.gov/docs/publications/FN/1526248.pdf |
| BillText | https://www.legis.iowa.gov/docs/publications/LGI/91/attachments/HF1030.html |
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