HB1416: HB1416 Income tax; exclude tips from taxation

26 LC 59 9002 House Bill 1416 By: Representatives Horner of the 3rd, Ridley of the 22nd, Ridley of the 6th, Persinger of the 119th, and Barrett of the 24th A BILL TO BE ENTITLED AN ACT To amend Article 2 of Chapter 7 of Title 48 of the Official Cod e of Georgia Annotated,1 relating to the imposition, rate, computation, exemptions, and credits for state income tax,2 so as to exclude tips from taxation; to provide for reporting by employers; to provide for a3 definition; to provide for related matters; to provide for an effective date and applicability;4 to repeal conflicting laws; and for other purposes.5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:6 SECTION 1.7 Article 2 of Chapter 7 of Title 48 of the Official Code of Georgia Annotated, relating to the8 imposition, rate, computation, exemptions, and credits for state income tax, is amended in9 subsection (a) of Code Section 48-7-27, relating to the computation of taxable net income,10 by deleting "and" at the end of paragraph (14), by replacing th e period at the end of11 paragraph (15) with "; and", and by adding a new paragraph to read as follows:12 "(16)(A) All tips received by an employee, provided that such i ncome is included in13 the taxpayer's federal adjusted gross income and, but for this paragraph, would be14 subject to taxation by this state.15 H. B. 1416 - 1 - 26 LC 59 9002 (B) Each employer shall submit to the department, on forms pre scribed by the16 department, the following:17 (i) For the tax year beginning on January 1, 2026, the total amount of tips received18 by any employee who received tips during the tax year. Such da ta shall be due no19 later than January 31, 2027;20 (ii) For the tax year beginning on January 1, 2027, and each tax year thereafter, the21 total amount of tips received by any employee who received tips during the tax year. 22 Such data shall be provided monthly or quarterly and shall be d ue no later than the23 due date for the corresponding monthly or quarterly withholding tax returns; and24 (iii) Such additional information as may be required by the co mmissioner to25 effectuate this paragraph.26 (C) As used in this paragraph, the term 'tips' means and inclu des cash tips received27 directly from customers; tips from customers who leave a tip th rough electronic28 settlement or payment, such as a credit card, debit card, gift card, or any other29 electronic payment method; the value of any noncash tips, such as tickets or other items30 of value; and tip amounts received from other employees paid out through tip pools, tip31 splitting, or any other formal or informal tip-sharing arrangement. Such term shall not32 include service charges that customers must pay, such as automatic gratuities."33 SECTION 2.34 This Act shall become effective on July 1, 2026, and shall be applicable to all taxable years35 beginning on or after January 1, 2026.36 SECTION 3.37 All laws and parts of laws in conflict with this Act are repealed.38 H. B. 1416 - 2 -