Arizona House Advances Bill to End State Income Tax on Tips

Arizona would exempt tips from state income tax under a bill the state House of Representatives passed on Monday.

The bill (H.B. 2081) passed 37-21 and now moves to the state Senate for consideration. It is one of the priorities on the Arizona House Republicans’ agenda for 2025 and is inspired by President Donald Trump’s proposal to end income tax on tips at the federal level.

• Allowing taxpayers to subtract tip income from Arizona gross income starting in 2025 would reduce state revenue by $31 million a year, according to a Joint Legislative Budget Committee analysis. ...