Maryland 2025 Regular Session

Maryland House Bill HB1400 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1
2	2
3	3	EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTING LAW.
4	4	[Brackets] indicate matter deleted from existing law.
5	5	hb1400
6	6
7	7	HOUSE BILL 1400
8	8	I3, K3, Q3 5lr1537
9	9	CF SB 823
10	10	By: Delegates Boafo, Turner, Acevero, Allen, Behler, Foley, Harris, Kaiser,
11	11	Kaufman, Lopez, Martinez, Terrasa, Williams, Wims, Woods, and Wu
12	12	Introduced and read first time: February 7, 2025
13	13	Assigned to: Economic Matters and Ways and Means
14	14
15	15	A BILL ENTITLED
16	16
17	17	AN ACT concerning 1
18	18
19	19	No Tax on Tips Act 2
20	20
21	21	FOR the purpose of establishing consumer protections related to service fees charged by 3
22	22	food service facilities; specifying the State minimum wage rate and tip credit amount 4
23	23	that is in effect for certain time periods; prohibiting certain employers of tipped 5
24	24	employees, beginning on a certain date, from including a tip credit amount as part 6
25	25	of the employees’ wages; allowing a subtraction under the State income tax for 7
26	26	certain qualified tips received by individuals during the course of employment; 8
27	27	allowing a person a credit against the State income tax for up to a certain amount 9
28	28	paid to an employee of the person based on the payment of certain wages and tips; 10
29	29	and generally relating to service fees, the payment of wages, tip credits, and State 11
30	30	income taxes. 12
31	31
32	32	BY repealing and reenacting, with amendments, 13
33	33	Article – Commercial Law 14
34	34	Section 13–301(14)(xlii) 15
35	35	Annotated Code of Maryland 16
36	36	(2013 Replacement Volume and 2024 Supplement) 17
37	37
38	38	BY repealing and reenacting, without amendments, 18
39	39	Article – Commercial Law 19
40	40	Section 13–301(14)(xliii) 20
41	41	Annotated Code of Maryland 21
42	42	(2013 Replacement Volume and 2024 Supplement) 22
43	43
44	44	BY adding to 23
45	45	Article – Commercial Law 24
46	46	Section 13–301(14)(xliv) and 14–1328 25
47	47	Annotated Code of Maryland 26
48	48	(2013 Replacement Volume and 2024 Supplement) 27 2 HOUSE BILL 1400
49	49
50	50
51	51
52	52	BY repealing and reenacting, with amendments, 1
53	53	Article – Labor and Employment 2
54	54	Section 3–413 and 3–419 3
55	55	Annotated Code of Maryland 4
56	56	(2016 Replacement Volume and 2024 Supplement) 5
57	57
58	58	BY repealing and reenacting, without amendments, 6
59	59	Article – Tax – General 7
60	60	Section 10–207(a) 8
61	61	Annotated Code of Maryland 9
62	62	(2022 Replacement Volume and 2024 Supplement) 10
63	63
64	64	BY adding to 11
65	65	Article – Tax – General 12
66	66	Section 10–207(qq) and 10–758 13
67	67	Annotated Code of Maryland 14
68	68	(2022 Replacement Volume and 2024 Supplement) 15
69	69
70	70	SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 16
71	71	That the Laws of Maryland read as follows: 17
72	72
73	73	Article – Commercial Law 18
74	74
75	75	13–301. 19
76	76
77	77	Unfair, abusive, or deceptive trade practices include any: 20
78	78
79	79	(14) Violation of a provision of: 21
80	80
81	81	(xlii) Section 12–6C–09.1 of the Health Occupations Article; [or] 22
82	82
83	83	(xliii) Title 14, Subtitle 48 of this article; or 23
84	84
85	85	(XLIV) SECTION 14–1328 OF THIS ARTICLE; OR 24
86	86
87	87	14–1328. 25
88	88
89	89	(A) (1) IN THIS SECTION THE F OLLOWING WORDS HAVE THE MEANINGS 26
90	90	INDICATED. 27
91	91
92	92	(2) “FOOD SERVICE FACILITY ” HAS THE MEANING STAT ED IN § 28
93	93	21–301 OF THE HEALTH – GENERAL ARTICLE. 29
94	94
95	95	(3) “SERVICE FEE” MEANS A FEE ADDED BY A FOOD SERVICE 30
96	96	FACILITY TO A CUSTOM ER’S TOTAL CHARGE THAT IS SEPARATE FROM : 31 HOUSE BILL 1400 3
97	97
98	98
99	99
100	100	(I) THE PRICE LISTED ON T HE MENU FOR FOOD, DRINKS, OR 1
101	101	MERCHANDISE SOLD BY THE FOOD SERVICE FAC ILITY; AND 2
102	102
103	103	(II) ANY SALES TAX THE FOO D SERVICE FACILITY I S REQUIRED 3
104	104	TO COLLECT. 4
105	105
106	106	(B) A FOOD SERVICE FACILIT Y MAY NOT CHARGE A S ERVICE FEE UNLESS 5
107	107	THE FOOD SERVICE FAC ILITY PROMINENTLY DI SCLOSES TO THE CUSTOMER ON TH E 6
108	108	MENU OR IN A LOCATIO N THAT IS VISIBLE TO THE CUSTOMER BEFORE THE 7
109	109	CUSTOMER PLACES AN O RDER: 8
110	110
111	111	(1) THE AMOUNT AND PURPOS E OF THE SERVICE FEE ; AND 9
112	112
113	113	(2) WHETHER THE SERVICE F EE IS PAID DIRECTLY TO EMPLOYEES IN 10
114	114	ADDITION TO THEIR WA GES. 11
115	115
116	116	(C) A VIOLATION OF THIS SE CTION BY A FOOD SERV ICE FACILITY IS: 12
117	117
118	118	(1) AN UNFAIR, ABUSIVE, OR DECEPTIVE TRADE P RACTICE WITHIN 13
119	119	THE MEANING OF TITLE 13 OF THIS ARTICLE; AND 14
120	120
121	121	(2) SUBJECT TO THE ENFORC EMENT AND PENALTY PR OVISIONS 15
122	122	CONTAINED IN TITLE 13 OF THIS ARTICLE. 16
123	123
124	124	Article – Labor and Employment 17
125	125
126	126	3–413. 18
127	127
128	128	(a) [(1)] In this section [the following words have the meanings indicated. 19
129	129
130	130	(2) “Employer”], “EMPLOYER” includes a governmental unit. 20
131	131
132	132	[(3) “Small employer” means an employer that employs 14 or fewer 21
133	133	employees.] 22
134	134
135	135	(b) Except as provided in subsection (d) of this section and § 3–414 of this subtitle, 23
136	136	each employer shall pay: 24
137	137
138	138	(1) to each employee who is subject to both the federal Act and this subtitle, 25
139	139	at least the greater of: 26
140	140
141	141	(i) the minimum wage for that employee under the federal Act; or 27
142	142
143	143	(ii) the State minimum wage set under subsection (c) of this section; 28 4 HOUSE BILL 1400
144	144
145	145
146	146	and 1
147	147
148	148	(2) to each other employee who is subject to this subtitle, at least the 2
149	149	greater of: 3
150	150
151	151	(i) the highest minimum wage under the federal Act; or 4
152	152
153	153	(ii) the State minimum wage set under subsection (c) of this section. 5
154	154
155	155	(c) [(1) Except as provided in paragraph (2) of this subsection, the] THE State 6
156	156	minimum wage rate is: 7
157	157
158	158	[(i) for the 12–month period beginning January 1, 2023, $13.25 per 8
159	159	hour; and 9
160	160
161	161	(ii)] (1) FOR THE 36–MONTH PERIOD beginning January 1, 2024, 10
162	162	$15.00 per hour[.]; 11
163	163
164	164	[(2) The State minimum wage rate for a small employer is: 12
165	165
166	166	(i) for the 12–month period beginning January 1, 2023, $12.80 per 13
167	167	hour; and 14
168	168
169	169	(ii) beginning January 1, 2024, $15.00 per hour.] 15
170	170
171	171	(2) FOR THE 12–MONTH PERIOD BEGINNI NG JANUARY 1, 2027, 16
172	172	$17.00 PER HOUR; 17
173	173
174	174	(3) FOR THE 6–MONTH PERIOD BEGINNI NG JANUARY 1, 2028, $18.50 18
175	175	PER HOUR; AND 19
176	176
177	177	(4) BEGINNING JULY 1, 2028, $20.00 PER HOUR. 20
178	178
179	179	(d) An employer may pay an employee a wage that equals a rate of 85% of the 21
180	180	State minimum wage established under this section if the employee is under the age of 18 22
181	181	years. 23
182	182
183	183	3–419. 24
184	184
185	185	(a) (1) Except as provided in § 3–1604(d) of this title, this section applies to 25
186	186	each employee who: 26
187	187
188	188	(i) is engaged in an occupation in which the employee customarily 27
189	189	and regularly receives more than $30 each month in tips; 28
190	190
191	191	(ii) has been informed by the employer about the provisions of this 29 HOUSE BILL 1400 5
192	192
193	193
194	194	section; and 1
195	195
196	196	(iii) has kept all of the tips that the employee received. 2
197	197
198	198	(2) Notwithstanding paragraph (1)(iii) of this subsection, this section does 3
199	199	not prohibit the pooling of tips. 4
200	200
201	201	(b) Subject to the limitations in this section, an employer may include, as part of 5
202	202	the wage of an employee to whom this section applies: 6
203	203
204	204	(1) an amount that the employer sets to represent the tips of the employee; 7
205	205	or 8
206	206
207	207	(2) if the employee or representative of the employee satisfies the 9
208	208	Commissioner that the employee received a lesser amount in tips, the lesser amount. 10
209	209
210	210	(c) (1) The tip credit amount that the employer may include under subsection 11
211	211	(b) of this section may not exceed the minimum wage established under § 3–413 of this 12
212	212	subtitle for the employee less [$3.63]: 13
213	213
214	214	(I) FOR THE 12–MONTH PERIOD BEGINNING JANUARY 1, 2027, 14
215	215	$12.00; AND 15
216	216
217	217	(II) FOR THE 6–MONTH PERIOD BEGINNI NG JANUARY 1, 2028, 16
218	218	$13.50. 17
219	219
220	220	(2) BEGINNING JULY 1, 2028, AN EMPLOYER : 18
221	221
222	222	(I) MAY NOT INCLUDE A TI P CREDIT AS PART OF THE WAGE OF 19
223	223	AN EMPLOYEE SUBJECT TO THIS SUBTITLE; AND 20
224	224
225	225	(II) SHALL PAY AN EMPLOYE E A WAGE THAT IS AT LEAST EQUAL 21
226	226	TO THE STATE MINIMUM WAGE SE T UNDER § 3–413 OF THIS SUBTITLE. 22
227	227
228	228	(3) THIS SECTION MAY NOT BE CONSTRUED AS PROH IBITING THE 23
229	229	PAYMENT OF TIPS TO E MPLOYEES. 24
230	230
231	231	(d) (1) The Commissioner shall adopt regulations, in consultation with payroll 25
232	232	service providers and restaurant industry trade group representatives, to require 26
233	233	restaurant employers that include a tip credit as part of the wage of an employee to provide 27
234	234	tipped employees with a written or electronic wage statement for each pay period that 28
235	235	shows the effective hourly tip rate as derived from employer–paid cash wages plus all 29
236	236	reported tips for tip credit hours worked each workweek of the pay period. 30
237	237
238	238	(2) The Commissioner shall provide notification of the tip credit wage 31 6 HOUSE BILL 1400
239	239
240	240
241	241	statement regulations on the Department’s website. 1
242	242
243	243	Article – Tax – General 2
244	244
245	245	10–207. 3
246	246
247	247	(a) To the extent included in federal adjusted gross income, the amounts under 4
248	248	this section are subtracted from the federal adjusted gross income of a resident to determine 5
249	249	Maryland adjusted gross income. 6
250	250
251	251	(QQ) (1) (I) IN THIS SUBSECTION THE FOLLOWING WORDS HAVE THE 7
252	252	MEANINGS INDICATED . 8
253	253
254	254	(II) “EMPLOYMENT ” MEANS WORK IN AN OCCUPATION OR 9
255	255	INDUSTRY IN WHICH AN INDIVIDU AL IS CUSTOMARILY CO MPENSATED THROUGH A 10
256	256	COMBINATION OF WAGES AND TIPS, SUCH AS BARBERING, COSMETOLOGY , 11
257	257	HOSPITALITY, FOOD AND BEVERAGE SE RVICE, PARKING SERVICES, AND CUSTODIAL 12
258	258	SERVICES. 13
259	259
260	260	(III) “QUALIFIED TIPS” MEANS TIP S RECEIVED BY AN 14
261	261	INDIVIDUAL DURING THE COURSE OF EMPLOYMENT THAT ARE PAID TO THE 15
262	262	INDIVIDUAL BY AN UNRELATED PARTY WHO DOES NOT H AVE AN OWNERSHIP STA KE 16
263	263	IN THE BUSINESS PROV IDING THE EMPLOYMENT . 17
264	264
265	265	(2) THE SUBTRACTION UNDER SUBSECTION (A) OF THIS SECTION 18
266	266	INCLUDES THE AMOUNT OF QUALIFIED TIPS RECEIVED BY AN INDIVIDUAL DURING 19
267	267	THE TAXABLE YEAR . 20
268	268
269	269	10–758. 21
270	270
271	271	(A) SUBJECT TO THE LIMITA TIONS OF THIS SECTIO N, FOR A TAXABLE YEAR 22
272	272	BEGINNING AFTER DECEMBER 31, 2026, BUT BEFORE JANUARY 1, 2029, A PERSON 23
273	273	MAY CLAIM A CREDIT A GAINST THE STATE INCOME TAX IN AN AMOUNT EQUAL T O 24
274	274	50% OF THE DIFFERENCE BETWEEN: 25
275	275
276	276	(1) THE MINIMUM WAGE PAI D TO AN EMPLOYEE OF THE PERSON IN 26
277	277	ACCORDANCE WITH § 3–413 OF THE LABOR AND EMPLOYMENT ARTICLE; AND 27
278	278
279	279	(2) THE TIP CREDI T AMOUNT ALLOWED UND ER § 3–419 OF THE 28
280	280	LABOR AND EMPLOYMENT ARTICLE. 29
281	281
282	282	(B) (1) FOR ANY TAXABLE YEAR , THE TOTAL AMOUNT OF THE CREDIT 30
283	283	ALLOWED UNDER THIS S ECTION MAY NOT EXCEE D: 31
284	284	HOUSE BILL 1400 7
285	285
286	286
287	287	(I) THE STATE INCOME TAX IMPO SED FOR THAT TAXABLE 1
288	288	YEAR; OR 2
289	289
290	290	(II) $10,000. 3
291	291
292	292	(2) ANY UNUSED AMOUNT OF THE CREDIT FOR ANY T AXABLE YEAR 4
293	293	MAY NOT BE CARRIED O VER TO ANY OTHER TAX ABLE YEAR. 5
294	294
295	295	SECTION 2. AND BE IT FURTHER ENACTED, That this Act is contingent on the 6
296	296	passage of Chapter(s) ___(S.B. 809 or H.B. 1458) of the Acts of the General Assembly of 7
297	297	2025, a constitutional amendment, and its ratification by the voters of the State. 8
298	298
299	299	SECTION 3. AND BE IT FURTHER ENACTED, That, subject to Section 2 of this 9
300	300	Act, this Act shall take effect on the proclamation of the Governor that the constitutional 10
301	301	amendment, having received a majority of the votes cast at the general election, has been 11
302	302	adopted by the people of Maryland. 12