This bill amends Section 422.7 of the Iowa Code to exempt cash tips from the individual income tax. Specifically, it introduces a new subsection that 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 bill is set to take effect for tax years beginning on or after January 1, 2026, thereby providing a tax benefit to individuals who receive cash tips in their employment. This change aims to alleviate the tax burden on workers who rely on tips as a significant part of their income.

Statutes affected:
Introduced: 422.7