Two lawmakers plan to introduce legislation that would exempt cash tips from the state income tax.

State Sen. André Jacque, R-De Pere, and state Rep. Cody Horlacher, R-Mukwonago, said tipped employees make up the majority of the workforce in various service industries throughout the state. Many of these employees are high school students, young adults working their way through college, and parents from single-income homes.

Under their bill, cash tips received by an employee would be exempt from state income tax. They say it would represent a great benefit to employees in Wisconsin’s tourism, restaurant, and tavern industries while providing businesses that use a tip structure a hiring incentive to recruit employees.

“Filling hospitality jobs is critical for Wisconsin’s economy,” Jacque said in a news release announcing the proposal. “For what can be a tiring and often thankless job, this bill is a common-sense way to incentivize outstanding service and entry of young people into Wisconsin’s workforce.”

“I am excited to introduce this legislation to reduce government intrusion and help to put more money in taxpayers’ pockets,” Horlacher said.

If passed, Wisconsin would be the first state in the country to create a state income tax exemption for cash tips paid to employees.

Photo – Tip money © Danaichidsin | Dreamstime.com