Do I pay California state tax on my tips?
The short answer
The rule in California
| Tips taxed by the state | Yes. State personal income tax applies to wages and tips. |
|---|---|
| Federal tips deduction | California does not conform to the deduction for tips received. |
| Reporting rules | California does conform to the federal information return provisions for tips. |
“The changes made to federal law by this provision were added after January 1, 2025. As a result, California does not conform to the deduction for tips received.” (California FTB: Summary of federal income tax changes)
What’s different in California
On your federal return, qualified tips can come off your taxable income. On your California return, they can’t. The FTB split the provision in two: the state follows the federal reporting side, so tips still show on your wage forms, but not the deduction.
In practice that means two different taxable-income figures. Keep your full tip total for the state return, and track the qualified portion separately for the federal one. A bill, AB 1550, would bring the deduction to California for 2026 through 2028, but the FTB page didn’t show it enacted when we checked.
Official sources
Last verified
. Checked the agency pages linked above.
Still open: AB 1550 would conform California to the federal tips deduction for 2026–2028. The FTB page didn’t show it enacted as of September 23, 2026.