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 to Minnesota Statutes 2024, section 290.0132, which defines "tip income" and allows individuals to subtract reported tips from their taxable income. The bill clarifies that tips are amounts reported to employers or the Internal Revenue Service, 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 that states 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 employers. This change aims to simplify the tax treatment of tip income for both employees and employers, with the effective date for these provisions also set for taxable years beginning after December 31, 2024.

Statutes affected:
Introduction: 290.0132, 290.92