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 Internal Revenue Service, and this provision will take effect for taxable years beginning after December 31, 2024.

Additionally, the bill amends Minnesota Statutes 2024, section 290.92, to exempt tip income from tax withholding requirements. A new subdivision is added to specify that income classified as tips, as defined in the previous section, will not be subject to withholding. The existing language regarding the withholding of taxes on tips is deleted, streamlining the process for employers and employees. This change also becomes effective for taxable years starting after December 31, 2024.

Statutes affected:
Introduction: 290.0132, 290.92