If enacted, this bill would amend current Arizona statutes by introducing a new individual income tax subtraction for tips received by employees. Specifically, it would allow taxpayers to subtract compensation received as tips during the taxable year, provided these tips are reported to the employer and are not already excluded from Arizona gross income under the Internal Revenue Code. This change would apply to taxable years beginning January 1, 2025.

The bill would insert new language into section 43-1022 of the Arizona Revised Statutes, specifying the conditions under which tips can be subtracted from taxable income. The current statute remains unchanged, but the new provisions would create a financial benefit for employees who receive tips, potentially reducing their overall tax liability.

Statutes affected:
Introduced Version: 43-1022
House Engrossed Version: 43-1022