Tip income exempted from the individual income tax and tax withholding requirements.

HF 164 exempts tip income from Minnesota's individual income tax and tax withholding requirements. The bill defines "tips" as amounts reported to employers under IRS rules (per Internal Revenue Code sections 6053(a) or 3121(q)) and excludes these amounts from taxable income. This directly affects Minnesota workers who earn tips, such as servers and bartenders, by reducing their taxable income. The change takes effect for taxable years beginning after December 31, 2024. The bill amends Minnesota Statutes sections 290.0132 and 290.92 to implement this tax exemption.