H.B. 520 Summary

• Excludes tips received by employees from Hawaii state income taxes, including gross income, adjusted gross income, and taxable income calculations

• Applies the exclusion only to tips that employees report to their employers for federal income tax purposes under U.S. Code Title 26, Section 3102

• Defines a "tipped employee" as an employee working in an occupation where they receive more than $30 per month in gratuities

• Authorizes the Director of Taxation to prepare necessary forms, require evidence from taxpayers, and adopt rules to implement the tax exclusion

• Takes effect for taxable years beginning after December 31, 2025