In California, getting a tip while working in restaurants or similar jobs isn’t guaranteed. That’s why state Senator Rosilicie Ochoa Bogh wants to stop taxing tips. She introduced Senate Bill 17, which would remove tips from state income taxes starting January 1, 2026. She said tips aren’t steady or enough to live on.
The bill is expected to cost the state $330 million in 2025–26 and $340 million in 2026–27 in lost tax revenue.
Supporters Say the Bill Helps Struggling Workers
Supporters of the bill say most tipped workers are women, younger people, or single parents, and they need this help. Senator Suzette Martinez Valladares said she once worked as a bartender and relied on tips to pay her rent. She believes this bill would help the people who need it the most.
She also mentioned that both presidential candidates have shown support for removing taxes on tips.
A Similar Bill Is Also Moving Through the Assembly
Another bill, Assembly Bill 1443, is similar and is being reviewed in the Assembly. It was written by Assemblymember Leticia Castillo, who said it’s unfair for the state to take a share of every tip. The bill hasn’t been voted on yet and is currently on hold for future discussion.
The California Restaurant Association also supports the bill, saying restaurants are still hurting from COVID-19 and recent wildfires, and this could help workers and businesses.
Castillo’s bill would also start in 2026 and end in 2031.
Some Experts Worry About Loopholes
Not everyone agrees with the bills. Some analysts are worried that people might label regular payments as “tips” to avoid taxes. For example, someone could call a large part of a bill a tip instead of income.
They also pointed out that only 5% of workers who earn less than $25/hour get tips, so 95% of lower-income workers wouldn’t benefit from the change.
New State Holidays Also Proposed
Two new state holidays were also discussed:
- Assembly Bill 989 would make Native American Day a paid state holiday on the fourth Friday in September.
- Assembly Bill 268 would recognize Diwali, a religious celebration for many Hindus, Sikhs, and Jains, but it wouldn’t be a paid day off.
Both bills were approved by the committee and will move forward for further review.
