No Tax on Tips Act

SB 823 (No Tax on Tips Act) exempts certain tips received by employees in food service from state income tax through a tax subtraction and credit for both workers and employers. It requires food service facilities to clearly disclose service fees on menus - including whether fees go directly to employees - and prohibits employers from including tip credits in wages for tipped workers starting in 2024. The bill also updates Maryland’s minimum wage schedule for tipped employees, setting rates from $15.00 to $20.00 per hour through 2028. This directly affects tipped workers in restaurants and food service businesses, as well as their employers, by changing how tips are taxed and wages are calculated.