This bill amends Section 422.7 of the Iowa Code by adding a new subsection that exempts cash tips from the individual income tax. Specifically, it allows taxpayers to subtract the amount of cash tips received, provided these tips are reported on statements furnished to an employer in accordance with section 6053(a) of the Internal Revenue Code.

The provisions of this bill will take effect for tax years beginning on or after January 1, 2026. This change aims to alleviate the tax burden on individuals who receive cash tips, thereby encouraging transparency and compliance in reporting such income.

Statutes affected:
Introduced: 422.7