HB 1965 Virginia House of Delegates · 2025 Regular Session

Income tax, state; deduction for tips and overtime compensation.

Summary

Income tax deduction; tips and overtime compensation. Provides, for taxable years beginning on and after January 1, 2026, an income tax deduction for the amount of tips received during the taxable year that are included on statements furnished to the employer for federal tax purposes. The bill also establishes, for taxable years beginning on and after January 1, 2026, an income tax deduction for any overtime compensation, defined in the bill, received by an employee who is not exempt from overtime compensation rules pursuant to the federal Fair Labor Standards Act.

Bill status in committee 1 of 4 stages cleared

Introduction

Jan 2025

Committee Review

Floor Vote

Governor

Introduced Jan 6, 2025 Last action Feb 4, 2025

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What changed between versions

Introduced → HFIN Sub: Subcommittee #3 Substitute · 4 edits

MODERATE

The bill was amended from its original introduction to a substitute version, primarily changing the title to focus only on 'tips' rather than 'tips and overtime compensation.' The substantive policy content regarding Virginia income tax deductions remains largely unchanged, with the main difference being the removal of the proposed overtime compensation deduction provision. This change narrows the bill's scope to only address tip income deductions for taxable years beginning on or after January 1, 2026, rather than including overtime compensation as well.

Scope change

The bill's scope was narrowed from covering both tips and overtime compensation to only covering tips, removing the overtime compensation deduction provision entirely.

SCOPE

Removed the proposed overtime compensation deduction provision that would have allowed taxpayers to deduct overtime pay received under the federal Fair Labor Standards Act for taxable years beginning on or after January 1, 2026.

TITLE

Changed the bill title from 'relating to income tax deduction; tips and overtime compensation' to 'relating to income tax deduction; tips' to reflect the removal of overtime compensation from the bill's scope.

TECHNICAL

Changed the bill status from 'Introduced' to 'OFFERED FOR CONSIDERATION' and added committee markup formatting with line numbers and draft indicators.

Removed pre-filed and offered dates from the original introduction, replacing them with the substitute version date of January 27, 2025.

Floor votes

How they voted

No floor votes recorded yet.

Full legislative history

Actions timeline

Total actions

Key actions

Committee

Jan 24, 2025

Committee

Assigned Finance sub: Subcommittee #3

lower

Jan 6, 2025

Committee

Referred to Committee on Finance

lower

1 primary · 0 co-sponsors