Personal Income Tax Law: deductions: tips.

Plain English Breakdown

The official source material does not provide specific details on goals, performance indicators, or data collection requirements related to the bill's impact.

Personal Income Tax Deductions for Tips

SB-984 allows people who earn tips to deduct those amounts from their taxable income, aligning with federal rules starting January 1, 2026.

What This Bill Does

• Allows workers who get tips to subtract the amount of those tips when figuring out how much tax they owe for tax years beginning on or after January 1, 2026, and before January 1, 2029.

Who It Names or Affects

• People who earn tips as part of their income

Terms To Know

Qualified Tips

Tips that meet certain requirements and can be deducted from taxable income.

Limits and Unknowns

• The bill does not specify what happens after January 1, 2029.
• It is unclear if there will be further changes to this rule beyond the specified period.

Official Summary Text

SB 984, as introduced, Ochoa Bogh.
Personal Income Tax Law: deductions: tips.
The Personal Income Tax Law, in modified conformity with federal income tax laws, allows various deductions in calculating taxable income. Existing federal income tax law, for taxable years beginning before January 1, 2029, allows deductions in determining taxable income, as defined, for amounts equal to the qualified tips, as defined.
This bill, for taxable years beginning on or after January 1, 2026, and before January 1, 2029, would conform to federal income tax law with regard to qualified tips.
Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.
This bill also would include additional information required for any bill authorizing a new tax expenditure.
This bill would take effect immediately as a tax levy.

Current Bill Text

Download Bill PDF