Tax bill lets workers deduct tips and overtime

Personal income taxes: deductions: tips: overtime compensation.

Introduced· 2026-01-07

Who's it for

Who's it for: Workers

What it means for you

8/10Helps you

Good for everyday people ·

Plain‑English summary, cross‑checked against the official bill text.

If passed, the bill would let Californians who get tips or overtime take those amounts off their state income tax, lowering what they owe.

Our take

What we think, in plain words.

Workers who rely on tips or extra hours could keep more of their pay, while the state may collect less tax revenue, so voters should watch the bill as it moves forward.

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The facts

What the bill actually says, no spin.

Aligns California tax deductions for qualified tips and overtime with federal law for 2026‑2029.
Allows tip and overtime deductions in addition to the standard deduction.
Sets the standard deduction at $1,880 for single filers and $3,760 for heads of household or joint returns.
Requires the Franchise Tax Board to adjust the standard deduction each year for inflation using CPI data.
Adds a reporting requirement for the Franchise Tax Board to detail how many taxpayers use the tip/overtime deductions and the average amount deducted.
Excludes the social security number requirement for the tip and overtime deduction provisions.