Relating to: an income tax exemption for cash tips paid to an employee. (FE)

AB 38 clarifies that cash tips received by employees from customers are taxable income under state law. It creates a new definition (71.05(1)(j)) specifying that "tips" include cash tips paid directly by customers, and amends multiple tax calculation sections to explicitly include "tips" in income categories for nonresident and part-year resident taxpayers. The bill updates formulas to ensure tips are counted when calculating taxable income for apportionment purposes, affecting tipped employees (like servers) and nonresidents earning tips in the state. This change ensures cash tips are treated consistently with other wages for tax purposes, without creating new exemptions.