AN ACT ESTABLISHING A TEMPORARY PERSONAL INCOME TAX DEDUCTION FOR TIPS OR GRATUITIES.

Plain English Breakdown

The exact method of calculating the reduction (phase-out) is mentioned but not detailed in the provided excerpts.

Temporary Tax Deduction for Tips

This bill creates a temporary tax break that lets taxpayers subtract up to $25,000 of their reported tips from the income they pay taxes on.

What This Bill Does

• Creates a new deduction for personal income tax returns based on declared tips or gratuities.
• Limits the total amount of this deduction to twenty-five thousand dollars per taxpayer.
• Applies only to taxable years starting between January 1, 2026, and December 31, 2028.
• Reduces the size of the deduction for single filers with adjusted gross income over $150,000.
• Reduces the size of the deduction for married couples filing jointly with adjusted gross income over $300,000.

Who It Names or Affects

• Taxpayers who report tips or gratuities on their state tax returns.
• Single filers whose adjusted gross income is above one hundred fifty thousand dollars.
• Married individuals filing jointly whose combined adjusted gross income is above three hundred thousand dollars.

Terms To Know

Deduction

An amount of money that can be subtracted from total income before calculating how much tax to pay.

Adjusted Gross Income (AGI)

A taxpayer's earnings used here to determine if the deduction is reduced based on set limits.

Limits and Unknowns

• The bill does not specify the exact formula for how much the deduction decreases once income passes the threshold.
• No effective date is listed in the provided metadata, though the tax years begin on January 1, 2026.

Official Summary Text

To establish a temporary personal income tax deduction of up to twenty-five thousand dollars for the amount of tips or gratuities declared by certain taxpayers for the taxable years commencing on or after January 1, 2026, and prior to January 1, 2029.

Current Bill Text

LCO No. 128 1 of 1

General Assembly Proposed Bill No. 66
February Session, 2026 LCO No. 128

Referred to Committee on FINANCE, REVENUE AND
BONDING

Introduced by:
SEN. GORDON, 35th Dist.

AN ACT ESTABLISHING A TEMPORARY PERSONAL INCOME TAX
DEDUCTION FOR TIPS OR GRATUITIES.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:

That title 12 of the general statutes be amended to (1) establish a 1
personal income tax deduction of up to twenty-five thousand dollars for 2
the amount of tips or gratuities declared by a taxpayer for the taxable 3
years commencing on or after January 1, 2026, and prior to January 1, 4
2029, and (2) provide for income threshold phase-outs of the deduction 5
for adjusted gross income over one hundred fifty thousand dollars for 6
single filers and three hundred thousand dollars for married individuals 7
filing jointly. 8
Statement of Purpose:
To establish a temporary personal income tax deduction of up to
twenty-five thousand dollars for the amount of tips or gratuities
declared by certain taxpayers for the taxable years commencing on or
after January 1, 2026, and prior to January 1, 2029.