EXEMPT TIPS FROM INCOME TAX

SB 285, titled "EXEMPT TIPS FROM INCOME TAX," would exempt tips received by New Mexico residents as compensation for services (e.g., from servers, bartenders) from being included in taxable income. The bill directs that tips earned as part of wages or compensation would not count toward net income for tax purposes. This change would apply to taxable years beginning January 1, 2025, directly affecting service industry workers who rely on tips. The bill does not alter minimum wage requirements or tip-sharing rules, focusing solely on tax treatment of tip income.