HLS 25RS-74 ORIGINAL
2025 Regular Session
HOUSE BILL NO. 198
BY REPRESENTATIVE KNOX
TAX/INCOME-INDIV/EXEMPT: Authorizes an income tax deduction for tip income
earned by taxpayers at or below certain income levels
1 AN ACT
2To enact R.S. 47:293(9)(a)(xxvii) and 297.26, relative to individual income tax; to authorize
3 a deduction from tax table income for certain tip income; to provide for eligibility
4 for the deduction; to provide for the amount of the deduction; to provide for
5 termination of the deduction; to provide for definitions; to provide for applicability;
6 to provide for an effective date; and to provide for related matters.
7Be it enacted by the Legislature of Louisiana:
8 Section 1. R.S. 47:293(9)(a)(xxvii) and 297.26 are hereby enacted to read as follows:
9 §293. Definitions
10 The following definitions shall apply throughout this Part, unless the context
11 requires otherwise:
12 * * *
13 (9)(a) "Tax table income", for resident individuals, means adjusted gross
14 income plus interest on obligations of a state or political subdivision thereof, other
15 than Louisiana and its municipalities, title to which obligations vested with the
16 resident individual on or subsequent to January 1, 1980, and less:
17 * * *
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HB NO. 198
1 (xxvii) The deduction for tip income as authorized by R.S. 47:297.26.
2 * * *
3 §297.26. Tax deduction; tip income
4 A. Subject to the limitations provided in Subsection C of this Section, there
5 shall be allowed a deduction from tax table income for amounts of tip income, as
6 defined in Subsection B of this Section, that a resident taxpayer receives in a taxable
7 year.
8 B. For purposes of this Section, the term "tip income" shall mean the total
9 of all of the following amounts for any taxable year:
10 (1) The amount reported as "social security tips" on the taxpayer's IRS Form
11 W-2, or any successor to that form.
12 (2) The amount reported as "allocated tips" on the taxpayer's IRS Form W-2,
13 or any successor to that form.
14 (3) The amount of cash and charge tips received less the amount of cash and
15 charge tips reported to all employers as recorded on the taxpayer's IRS Form 4137,
16 or any successor to that form.
17 C.(1) The provisions of this Paragraph shall apply to any taxpayer who uses
18 a filing status of single, head of household, or married-separate. The amount of the
19 deduction shall be as follows:
20 (a) If the taxpayer's adjusted gross income is equal to or less than sixty-one
21 thousand dollars, the amount of the deduction shall be one hundred percent of tip
22 income.
23 (b) If the taxpayer's adjusted gross income is greater than sixty-one thousand
24 dollars but equal to or less than sixty-two thousand dollars, the amount of the
25 deduction shall be eighty percent of tip income.
26 (c) If the taxpayer's adjusted gross income is greater than sixty-two thousand
27 dollars but equal to or less than sixty-three thousand dollars, the amount of the
28 deduction shall be sixty percent of tip income.
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HB NO. 198
1 (d) If the taxpayer's adjusted gross income is greater than sixty-three
2 thousand dollars but equal to or less than sixty-four thousand dollars, the amount of
3 the deduction shall be forty percent of tip income.
4 (e) If the taxpayer's adjusted gross income is greater than sixty-four thousand
5 dollars but equal to or less than sixty-five thousand dollars, the amount of the
6 deduction shall be twenty percent of tip income.
7 (f) No taxpayer shall be eligible for the deduction authorized by this
8 Paragraph if his adjusted gross income in the taxable year is greater than sixty-five
9 thousand dollars.
10 (2) The provisions of this Paragraph shall apply to any taxpayer who uses a
11 filing status of married-joint or qualified surviving spouse. The amount of the
12 deduction shall be as follows:
13 (a) If the taxpayer's adjusted gross income is equal to or less than one
14 hundred twenty-two thousand dollars, the amount of the deduction shall be one
15 hundred percent of tip income.
16 (b) If the taxpayer's adjusted gross income is greater than one hundred
17 twenty-two thousand dollars but equal to or less than one hundred twenty-four
18 thousand dollars, the amount of the deduction shall be eighty percent of tip income.
19 (c) If the taxpayer's adjusted gross income is greater than one hundred
20 twenty-four thousand dollars but equal to or less than one hundred twenty-six
21 thousand dollars, the amount of the deduction shall be sixty percent of tip income.
22 (d) If the taxpayer's adjusted gross income is greater than one hundred
23 twenty-six thousand dollars but equal to or less than one hundred twenty-eight
24 thousand dollars, the amount of the deduction shall be forty percent of tip income.
25 (e) If the taxpayer's adjusted gross income is greater than one hundred
26 twenty-eight thousand dollars but equal to or less than one hundred thirty thousand
27 dollars, the amount of the deduction shall be twenty percent of tip income.
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HB NO. 198
1 (f) No taxpayer shall be eligible for the deduction authorized by this
2 Paragraph if his adjusted gross income in the taxable year is greater than one hundred
3 thirty thousand dollars.
4 D. This Section shall terminate and be null, void, and without effect on and
5 after the effective date of any amendments to the Internal Revenue Code of 1986
6 which eliminate the application of the federal income tax to any amounts of income
7 derived from tips.
8 Section 2. The provisions of this Act shall apply to taxable periods beginning on or
9after January 1, 2026.
10 Section 3. This Act shall become effective on January 1, 2026.
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
HB 198 Original 2025 Regular Session Knox
Abstract: Authorizes an income tax deduction for tip income for resident individual filers
with adjusted gross incomes (AGI) at or below certain levels.
Proposed law authorizes an income tax deduction, subject to limitations provided in
proposed law, for amounts of tip income that a resident individual taxpayer receives in a
taxable year.
Proposed law defines "tip income" as the total of all of the following amounts for any
taxable year:
(1)The amount reported as "social security tips" on the taxpayer's IRS Form W-2, or
any successor to that form.
(2)The amount reported as "allocated tips" on the taxpayer's IRS Form W-2, or any
successor to that form.
(3)The amount of cash and charge tips received less the amount of cash and charge tips
reported to all employers as recorded on the taxpayer's IRS Form 4137, or any
successor to that form.
Proposed law limits eligibility for the deduction for tip income to married joint filers and
qualified surviving spouses with AGI of $130,000 or less and all other filers (those using a
filing status of single, head of household, or married-separate) with incomes of $65,000 or
less. The amount of the deduction decreases as a filer's AGI increases as follows:
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HB NO. 198
Filer's AGI Tip Deduction Amount
$61,000 or less ($122,000 or less for married joint filers and
surviving spouses)
100%
$61,001 to $62,000 ($122,001 to $124,000 for married joint
filers and surviving spouses)
80%
$62,001 to $63,000 ($124,001 to $126,000 for married joint
filers and surviving spouses)
60%
$63,001 to $64,000 ($126,001 to $128,000 for married joint
filers and surviving spouses)
40%
$64,001 to $65,000 ($128,001 to $130,000 for married joint
filers and surviving spouses)
20%
Proposed law applies to taxable periods beginning on or after Jan. 1, 2026.
Proposed law terminates on the effective date of any amendments to the Internal Revenue
Code which eliminate the application of the federal income tax to any amounts of tip
income.
Effective Jan. 1, 2026.
(Adds R.S. 47:293(9)(a)(xxvii) and 297.26))
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