RELATING TO TAXATION.

Labor Taxes

Active

The official status still shows this bill as active or still awaiting another formal step.

Sponsor: MATSUMOTO, ALCOS, GARCIA, IWAMOTO, PIERICK, WARD
Last action: 2025-12-08
Official status: Carried over to 2026 Regular Session.
Effective date: Not listed

Plain English Breakdown

Checked against official source text during the last sync.

Income Tax Deduction for Tips

This bill allows workers who receive tips to deduct those tips from their income taxes.

What This Bill Does

Creates a new tax rule that lets tipped employees subtract the money they get in tips from what they owe in state income taxes.
Requires the director of taxation to make forms for people to claim this deduction and can ask for proof if needed.
Defines 'tips' as extra money given by customers, which workers report to their employers.
Specifies that a tipped employee is someone who gets more than $30 in tips each month.

Who It Names or Affects

Tipped employees such as waitstaff, bartenders, and other service industry workers.

Terms To Know

Tips: Extra money given by customers to workers in the service industry.
Tipped employee: A worker who regularly receives tips from customers and reports them to their employer.

Limits and Unknowns

The bill will only apply to taxable years starting after December 31, 2025.
It is not clear how many people this change will affect or what the financial impact might be.

Bill History

2025-12-08 D
Carried over to 2026 Regular Session.
2025-01-21 H
Referred to LAB, FIN, referral sheet 2
2025-01-21 H
Introduced and Pass First Reading.
2025-01-17 H
Pending introduction.

Official Summary Text

RELATING TO TAXATION.
Income Tax Deduction; Tips; Tipped Employees
Provides an income tax deduction for tips received by tipped employees.

Current Bill Text

Read the full stored bill text

HB575

HOUSE OF REPRESENTATIVES

H.B. NO.

575

THIRTY-THIRD LEGISLATURE, 2025

STATE OF HAWAII

A BILL FOR AN ACT

relating
to taxation
.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

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SECTION 1.
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Chapter 235, Hawaii Revised Statutes, is
amended by adding a new section to be appropriately designated and to read as
follows:

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�235-
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Tips;
tax deduction.
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(a)
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There shall be allowed as a deduction from gross income the amount equal
to the tips received during the taxable year that are included on the tipped
employee's statements furnished to the employer for purpose of the Federal Insurance
Contribution Act, 26 United States Code section 3102.

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(b)
�

The director of taxation shall prepare such forms as may be necessary to
claim a tax deduction under this section, may require proof of the claim for
the tax deduction and adopt rules pursuant to chapter 91.

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(c)
�

For the purposes of this section,

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"Tips" means gratuities or
voluntary monetary contributions received by an employee from a guest, patron,
or customer and that the employee reports to the employer for purposes of the Federal
Insurance Contribution Act, 26 United States Code section 3102.

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"Tipped employee" means an employee
working in an occupation in which the employee receives more than $30 a month
in gratuities.
"

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SECTION 2.
�
New statutory material is underscored.

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SECTION 3.
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This Act, upon its approval, shall apply to
taxable years beginning after December 31, 2025.

INTRODUCED BY:

_____________________________

Report Title:

Income
Tax Deduction; Tips; Tipped Employees

Description:

Provides
an income tax deduction for tips received by tipped employees.

The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.