Tip income exemption from the individual income tax and tax withholding requirements

SF 1488 exempts tip income from Minnesota's individual income tax and tax withholding requirements. The bill defines "tips" as amounts reported to an employer under IRS rules (Section 6053(a)) or reported to the IRS as wages subject to employer taxes (Section 3121(q)). This means tips reported by workers (like servers) will no longer be included in taxable income for state tax purposes. The exemption applies to taxable years beginning after December 31, 2024.