Budget Amendment ID: FY2027-S4-847

OTH 847

No Tax on Tips

Mr. Fattman moved that the proposed new text be amended by inserting after section X the following section:-

"SECTION X. Notwithstanding any special or general law to the contrary, for taxable years beginning on January 1, 2027, an amount not to exceed $25,000 of income received by a taxpayer during the taxable year in the form of tips or gratuities shall be excluded from Massachusetts gross income, as defined in chapter 62 of the General Laws.

For purposes of this section, “tips” or “gratuities” shall mean voluntary cash or non-cash amounts received by an employee from a customer or patron, whether received directly or distributed through an employer, consistent with the definition of tips under applicable provisions of the Internal Revenue Code and federal regulations.

In the case of a married couple filing a joint return, each spouse shall be entitled to a separate exclusion under this section, provided that each spouse has qualifying tip income.

The commissioner of revenue shall promulgate such rules and regulations as are necessary to implement this section, including provisions to prevent abuse or improper characterization of income as tips."