Hawaii HB520 proposes to exclude tips from state income taxes to support local small businesses.

Hawaii HB520 aims to exclude tips from state income taxes, aligning with a growing federal trend. This bill seeks to help local small businesses attract qualified employees by reducing their tax burden. Tips, defined as gratuities or voluntary monetary contributions reported to employers, will be excluded from gross income, adjusted gross income, and taxable income. The Director of Taxation will prepare necessary forms and may require evidence from tipped employees. The changes will apply to taxable years beginning after December 31, 2025.

Hawaii HB520 proposes to exclude tips from state income taxes to support local small businesses.

Hawaii HB520 aims to exclude tips from state income taxes, aligning with a growing federal trend. This bill seeks to help local small businesses attract qualified employees by reducing their tax burden. Tips, defined as gratuities or voluntary monetary contributions reported to employers, will be excluded from gross income, adjusted gross income, and taxable income. The Director of Taxation will prepare necessary forms and may require evidence from tipped employees. The changes will apply to taxable years beginning after December 31, 2025.