The bill, H.F. No. 1221, introduced in the Minnesota House of Representatives, seeks to amend Minnesota's tax code to exempt tip income from individual income tax and tax withholding requirements. Specifically, it modifies Minnesota Statutes 2024 by adding a new subdivision to section 290.0132 and amending section 290.92, subdivision 2a.

Key provisions of the bill include:

• Exemption of Tip Income: Tips reported by an individual to their employer (as required under federal tax laws) or to the Internal Revenue Service (IRS) would be subtracted from taxable income.
• Definition of Tips: The bill references federal tax code provisions that require employees to report tip income and employers to handle associated tax responsibilities.

If enacted, this bill would relieve tipped employees from paying Minnesota state income tax on their reported tip earnings and exempt employers from withholding state income tax on such earnings.