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Panel hears bill to temporarily exclude tips from state income tax
Summary
Assembly Bill 1443 would exempt tips from California state income tax for five years; the measure drew support from labor and industry groups and was referred to the committee's suspense file without a vote.
Assemblymember Castillo presented Assembly Bill 1443, a proposal to exclude tips from state income taxes for five years. Castillo said the change would provide immediate relief to service industry workers who rely on tips as a substantial portion of take-home pay.
"These are the people who put in long hours'servers, bartenders, barbers, hotel staff, taxi drivers'and yet every time they get a tip, the state takes a cut," Castillo said, calling the proposal a "targeted, temporary and responsible approach" to provide relief to workers.
Matt Sutton of the California Restaurant Association testified in support and described the measure as part of broader affordability efforts for restaurants that continue to face post-pandemic challenges including higher labor and operating costs. Tina Nguyen, a restaurant owner in the audience, said she strongly supports the bill and that her staff would benefit.
Committee members expressed support in principle but noted the bill will be considered on suspense. "We won't be making a vote and I appreciate the discussion on affordability," Member Quirk Silva said, adding the bill could help future workers though it will not retroactively change past hardship for those already impacted by disasters.
Chair Gibson announced AB 1443 is a suspense candidate and will be referred to the suspense file for later action; the committee did not vote on the measure at this hearing.
