Louisiana House Bill HB414

Louisiana 2025 Regular Session

• Introduced: 4/3/25
• Refer: 4/3/25
• Refer: 4/14/25

Caption

Exempts certain overtime compensation and income earned from tips from state income taxation (OR DECREASE GF RV See Note)

Impact

If enacted, HB 414 would amend existing Louisiana tax law to exempt certain earnings from taxation, specifically addressing concern over the financial burden placed on workers who rely on tips as part of their income. By allowing these deductions, the bill aims to improve the net income of low-wage earners who often work in high-service roles, thus potentially stimulating local economies as these individuals may spend more with increased disposable income.

Summary

House Bill 414 seeks to provide tax relief to residents of Louisiana by allowing deductions for both overtime compensation and tip income from their state income taxes. The bill defines 'overtime compensation' as wages paid for hours worked beyond a 40-hour workweek and establishes that tip income includes amounts reported as social security tips and allocated tips on IRS forms, as well as cash and charge tips received, less tips reported to employers. This would introduce a specific tax benefit aimed at workers in sectors where tips are a substantial part of their income, such as the service industry.

Sentiment

The sentiment around the bill appears to be generally positive among those in the service industry and supporters of tax relief measures. Advocates suggest that it would benefit workers who historically pay taxes on income that is not guaranteed or stable. However, there might be concerns about the potential revenue loss for the state from implementing these deductions, highlighting a possible contention between supporting workers and maintaining state funding.

Contention

Notable points of contention may revolve around the fiscal implications of instituting such tax deductions. Critics may argue that while the bill seeks to support those earning tip income, it could also reduce state revenue significantly, complicating budgeting for necessary public services. Additionally, there may be a debate regarding the adequate enforcement of documentation requirements needed for claiming these deductions, as various stakeholders might express concerns over administrative burdens on both taxpayers and the Department of Revenue.