CaliforniaCalifornia would let taxpayers deduct qualified tips from income
California taxpayers could deduct qualified tips under federal rules for tax years 2026 through 2028, except that a federal social security number requirement would not apply.
What it does
California would let taxpayers use the federal rules for deducting qualified tips, with an exception for the federal social security number requirement.
The Franchise Tax Board would report how many taxpayers deduct tips and the average amount they deduct.
Argument forWorkers with qualified tips could keep more of their earnings by subtracting those tips from taxable income.
Argument againstThe deduction could reduce state income tax revenue because eligible workers would subtract qualified tips from taxable income.
More detail
California would apply the federal income tax rules for qualified tips. This applies to California taxpayers claiming a deduction for qualified tips. The federal rule is used as it read on January 1, 2026. California replaces “secretary” with the Franchise Tax Board. The federal social security number requirement does not apply. This applies to taxable years beginning on or after January 1, 2026, and before January 1, 2029.
The Franchise Tax Board would report how many taxpayers deduct tips and the average amount deducted. The report covers taxpayers who deduct tips under this section and the average dollar value of those deductions. The Board must submit the report to the Legislature under Government Code Section 9795. The bill makes this disclosure an exception to tax information confidentiality rules. The Board must send the report to the Legislature no later than December 1, 2029.
Where do you stand?
Choose your position
Tell your reps
Take a position to see your representatives and ways to contact them.
Where it stands
- Introduced
- Passed Senate
- Passed Assembly
- To Governor
- Became Law
Looking ahead
No hearings or votes scheduled.
History
- 2026
- May 14May 14 hearing: Held in committee and under submission.Latest
- May 12Set for hearing May 14.
- May 11May 11 hearing: Placed on APPR. suspense file.
- Vote recorded Placed on suspense file. Result: pass.Upper
- May 7Set for hearing May 11.
- May 6From committee: Do pass and re-refer to Com. on APPR. (Ayes 5. Noes 0. Page 4154.) (May 6). Re-referred to Com. on APPR.Minor
- Vote recorded Do pass, but first be re-referred to the Committee on [Appropriations]. Result: pass.Upper
- Apr 29From committee with author's amendments. Read second time and amended. Re-referred to Com. on REV. & TAX.Major
- Apr 9Set for hearing May 6.
- Feb 18Referred to Com. on REV. & TAX.Minor
- Feb 9From printer. May be acted upon on or after March 8.
- Feb 5Introduced. Read first time. To Com. on RLS. for assignment. To print.Introduced
Economy & JobsTaxes & BudgetGovernment & Ethics