MADISON… Wisconsin workers could end up keeping more of their hard-earned money in their own pockets as result of Senator André Jacque’s “No Tax On Tips” legislation, which passed the Assembly Committee on Ways and Means today on a bi-partisan vote of 8 to 2.
Assembly Bill 38 (AB 38), authored by Sen. Jacque and Rep. Ron Tusler, would mean a raise for many Wisconsin workers by eliminating the state income tax on qualified tips.
Sen. Jacque and former Rep. Cody Horlacher originally proposed the idea of making tips exempt from taxation in legislation they authored in 2019 (Senate Bill 213/Assembly Bill 231) with broad bi-partisan support. The bill was spotlighted in media at the time as the first state legislative attempt in the country to create a state income tax exemption for tips paid to employees.
“Tax relief provided by AB 38 will help high school students, young adults working their way through college, parents from single income homes and many others among Wisconsin’s working class who depend upon income they receive from tips in exchange for excellent service,” said Jacque.
In Wisconsin, tipped employees make up a large amount of the workforce in various service industries, particularly in the robust hospitality and tourism sectors.
Exempting taxes on tips enjoys broad bi-partisan support. A 2024 Ipsos poll showed that 71% of Americans supported the concept, and it played a central role in the 2024 election campaign.
“Eliminating taxes on tips has broad bi-partisan support, and was endorsed by both major presidential candidates in the last election, and passed unanimously by the U.S. Senate earlier this year. I was pleased that Governor Evers also included my ‘No Tax on Tips’ legislation in his initial budget proposal earlier this year,” said Jacque.
Although included in the governor’s proposed state budget this summer, due to timing it became necessary to pass the change as a stand-alone bill to ensure it would mirror federal policy. AB 38 as amended eliminates the state income tax on tip earnings of up to $25,000 for any employee, which phases out for high income individuals. This bill positions Wisconsin to promptly conform its tax code to the federal tax exemption recently signed into law by President Trump.
The bill would not affect the day-to-day operation of businesses utilizing current federal tip tax credits, as the proposal only adjusts how individual employees would file their state taxes.
AB 38 will now go to the full Assembly for a vote. Its Senate companion has also received a hearing. If passed by both legislative chambers, the bill will be sent to the governor’s desk for a signature.
Senator André Jacque represents Northeast Wisconsin’s First Senate District, consisting of Door, Kewaunee and Calumet Counties and portions of Brown, Manitowoc, and Outagamie counties.
