20250SB__098498AMD INTRODUCED 2026-02-05 AMENDED_SENATE 2026-04-29 2025 SB AMD Introduced by Senators Ochoa Bogh and Grove (Coauthors: Senators Alvarado-Gil, Choi, Dahle, Hurtado, Jones, Seyarto, Strickland, and Valladares) (Coauthors: Assembly Members Alanis, Castillo, Davies, Hadwick, Hoover, Lackey, Patterson, and Tangipa) LEAD_AUTHOR SENATE Ochoa Bogh LEAD_AUTHOR SENATE Grove COAUTHOR SENATE Alvarado-Gil COAUTHOR SENATE Choi COAUTHOR SENATE Dahle COAUTHOR SENATE Hurtado COAUTHOR SENATE Jones COAUTHOR SENATE Seyarto COAUTHOR SENATE Strickland COAUTHOR SENATE Valladares COAUTHOR ASSEMBLY Alanis COAUTHOR ASSEMBLY Castillo COAUTHOR ASSEMBLY Davies COAUTHOR ASSEMBLY Hadwick COAUTHOR ASSEMBLY Hoover COAUTHOR ASSEMBLY Lackey COAUTHOR ASSEMBLY Patterson COAUTHOR ASSEMBLY Tangipa

An act to add and repeal

Section 17201.8 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. taxation, to take effect immediately, tax levy 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, except as provided. 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.

MAJORITY NO YES NO YES NO YES NO NO NO NO The people of the State of California do enact as follows:

SECTION

Section 17201.8 is added to the Revenue and Taxation Code , to read: 17201.8. (

a) For taxable years beginning on or after January 1, 2026, and before January 1, 2029,

Section of the Internal Revenue Code, relating to qualified tips, as it read on January 1, 2026, shall apply, except that

Section 224(

e) of the Internal Revenue Code, relating to social security number required, shall not apply. (b)

(1) For purposes of complying with

Section 41, the Legislature finds and declares the following: (

A) The specific goal of the deduction provided by this

section is to help workers retain more of their earnings. (

B) The performance indicators for the Legislature to use in determining whether the deduction achieves its goal shall be the number of taxpayers deducting tips from income pursuant to this section, and the average dollar amount of those amounts deducted from income. (2) (

A) The Franchise Tax Board, no later than December 1, 2029, shall submit a report to the Legislature, in compliance with

Section of the Government Code, detailing the number of taxpayers deducting tips from income under this

section and the average dollar value of those amounts deducted. (

B) The disclosure provisions of this paragraph shall be treated as an exception to

Section 19542. (

c) This

section shall remain operative only until December 1, 2029, and as of that date is repealed.

SEC. 2. This act provides for a tax levy within the meaning of

Article IV of the California Constitution and shall go into immediate effect.