HB 1416: Income tax; exclude tips from taxation

Right now, tips that Georgia workers receive count as taxable income under state law, just as they do for federal taxes. This bill would change that by adding tips as a new exclusion from Georgia taxable income (O.C.G.A. § 48-7-27), meaning workers would not pay Georgia income tax on tip money, as long as that money is included in their federal adjusted gross income and would otherwise be taxed by the state. The bill also creates a new employer reporting duty. Employers would have to report the total tips paid to employees to the Georgia Department of Revenue, starting with 2026 totals due by January 31, 2027, then on a monthly or quarterly basis matching withholding tax deadlines going forward. The bill defines 'tips' broadly to include cash, electronic payments, noncash items like tickets, and tip-pool distributions, but excludes mandatory service charges. The change would take effect July 1, 2026, and apply to tax years starting on or after January 1, 2026.

• Excludes all employee tips from Georgia state income tax, as long as the tips are part of the worker's federal adjusted gross income.
• Requires employers to report total tip amounts paid to each tipped employee to the Georgia Department of Revenue.
• Sets a January 31, 2027 deadline for employers to report 2026 tip totals, then shifts to monthly or quarterly reporting tied to withholding tax deadlines.
• Defines 'tips' to include cash, electronic payments (credit or debit card, gift card), noncash items of value, and tip-pool or tip-splitting proceeds.
• Excludes mandatory service charges, such as automatic gratuities, from the definition of tips that qualify for the tax exclusion.
• Sets an effective date of July 1, 2026, applying to tax years beginning on or after January 1, 2026.

Tipped workers in Georgia, such as restaurant servers, bartenders, and other service employees who receive cash or electronic tips, along with the employers who must track and report tip totals to the Georgia Department of Revenue, and the department itself, which must create reporting forms and collect the data.

Tipped workers in Georgia would keep more of their take-home pay since tip income would no longer be taxed at the state level. Employers would take on a new administrative task of tracking and reporting tip totals, and the state would collect less income tax revenue from tipped earnings.

• Section 1 amends O.C.G.A. § 48-7-27(a) to add tips as a new exclusion (paragraph 16) from Georgia taxable income, contingent on the tips being part of federal adjusted gross income.
• Section 1(B) requires employers to report tip totals to the Department of Revenue, with 2026 data due by January 31, 2027 and later years reported monthly or quarterly.
• Section 1(B)(iii) lets the state revenue commissioner require additional information from employers beyond the basic tip totals.
• Section 1(C) defines 'tips' to include cash, electronic payments, noncash items, and tip-sharing arrangements, but excludes mandatory service charges like automatic gratuities.
• Section 2 sets the effective date as July 1, 2026, applying to tax years beginning on or after January 1, 2026.

1. 2026-02-25House Second Readers (Cámara de Representantes)
2. 2026-02-24House First Readers (Cámara de Representantes)
3. 2026-02-20House Hopper (Cámara de Representantes)

• Mitchell Horner (R, HD-003)Patrocinador principal
• Jordan Ridley (R, HD-022)
• Jason Ridley (R, HD-006)
• Holt Persinger (R, HD-119)
• Carter Barrett (R, HD-024)

• income tax
• tipped workers
• restaurant industry
• tax exemptions
• employer reporting