This bill proposes amendments to Minnesota's taxation laws, specifically regarding individual income tax and the treatment of tip income. It introduces a new subdivision in Minnesota Statutes 2024, section 290.0132, which defines "tip income" and allows individuals to subtract reported tip amounts from their taxable income. The bill clarifies that tips are defined as amounts reported to an employer or the IRS, and it establishes that this provision will be effective for taxable years beginning after December 31, 2024.

Additionally, the bill amends Minnesota Statutes 2024, section 290.92, to exempt tip income from withholding requirements. A new subdivision is added to state that income classified as tips, as defined in the previous section, will not be subject to withholding. The bill also removes previous language that limited the applicability of withholding to tips reported in a written statement to the employer. This change aims to simplify the tax treatment of tip income for both employees and employers, effective for taxable years starting after December 31, 2024.

Statutes affected:
Introduction: 290.0132, 290.92