SF587 (Legislative Session 94 (2025-2026))
Paid gratuities to employees tax subtraction provision
Related bill: HF417
AI Generated Summary
Purpose
- Create a new subtraction ( deduction) in Minnesota individual income tax for gratuities (tips) paid to employees.
- Align the definition of gratuities with existing state law.
Main Provisions
- Adds Subdivision 36 to Minnesota Statutes 2024 section 290.0132.
- Subd. 36.1 (Tips/gratuities): The amount of gratuities is a subtraction from taxable income.
- Subd. 36.2: For purposes of this subdivision, gratuities have the meaning given in section 177.23 subdivision 9.
Significant Changes to Existing Law
- Establishes a new allowed subtraction specifically for gratuities (tips) paid to employees when calculating Minnesota individual income tax.
- Defines gratuities consistently with an existing Minnesota statute (177.23 subdivision 9).
Potential Implications
- Could reduce taxable income by the amount of gratuities, affecting tax liability for filers who report gratuities.
- Clarifies how gratuities are defined and treated under the state income tax code.
Relevant Terms gratuities tips subtraction (subtraction from taxable income) Minnesota Statutes 2024 section 290.0132 Subdivision 36 (Subd. 36) Gratuities definition in section 177.23 subdivision 9 177.23 subdivision 9
Actions
| Date | Chamber | Where | Type | Name | Committee Name |
|---|---|---|---|---|---|
| January 27, 2025 | Senate | Action | Introduction and first reading | ||
| January 27, 2025 | Senate | Action | Referred to | Taxes |
Citations
[
{
"analysis": {
"added": [
"Adds Subd. 36, titled 'Tips gratuities', to section 290.0132.",
"Subd. 36(a): 'The amount of gratuities is a subtraction.'",
"Subd. 36(b): Defines gratuities by reference to Minn. Stat. § 177.23, subd. 9."
],
"removed": [],
"summary": "This bill adds Subd. 36 to Minnesota Statutes 2024 section 290.0132 to include a subtraction for gratuities paid to employees, with gratuities defined by cross-reference to Minnesota Statutes 177.23, subd. 9.",
"modified": []
},
"citation": "290.0132",
"subdivision": "Subd. 36"
},
{
"analysis": {
"added": [
"No change to 177.23; cross-reference used to define 'gratuities'."
],
"removed": [],
"summary": "This bill references Minnesota Statutes 177.23, subdivision 9 to provide the definition of gratuities used in the new Subd. 36 of section 290.0132.",
"modified": []
},
"citation": "177.23",
"subdivision": "Subd. 9"
}
]Progress through the legislative process
In Committee