CA SB17

Allows a state income tax deduction for tips received by qualified workers, up to $20,000 per year, for taxable years beginning January 1, 2026, through January 1, 2036

Qualified taxpayers must regularly receive more than $20 per month in tips, have adjusted gross income not exceeding $250,000 (joint filers/head of household) or $125,000 (single filers), and cannot hold a professional license from the Department of Consumer Affairs (except barbering/cosmetology licenses)

Tips must be reported for federal tax purposes under IRS requirements and the Federal Insurance Contributions Act to qualify for the deduction

Requires the Franchise Tax Board to submit a report to the Legislature by December 1, 2036, detailing the number of taxpayers claiming the deduction and the average dollar value of tips deducted

Takes effect immediately as a tax levy and automatically sunsets on December 1, 2036