---
title: "Does California tax tips?"
description: "Yes. California taxes tips as income and doesn’t follow the federal deduction for qualified tips. A bill to adopt it was pending, not enacted."
url: https://www.tipmaxapp.com/us/answers/california/state-tax-on-tips
language: en
publisher: TipMax (Entermaurs Incorporated)
date_published: 2026-09-23
last_verified: 2026-09-23
---

# Do I pay California state tax on my tips?

**Short answer:** **Yes.** California’s Franchise Tax Board says state income tax applies to tips just as it does to wages. California also doesn’t follow the federal deduction for qualified tips, because the FTB says that federal change came after January 1, 2025. So the tips you deduct on your federal return are still taxable on your California return.

## The rules in California

| Rule | What it says |
| --- | --- |
| 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, https://www.ftb.ca.gov/about-ftb/data-reports-plans/Summary-of-Federal-Income-Tax-Changes/index.html)

## 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

- [California FTB: Summary of federal income tax changes](https://www.ftb.ca.gov/about-ftb/data-reports-plans/Summary-of-Federal-Income-Tax-Changes/index.html)
- [California FTB: income tax overview](https://www.ftb.ca.gov/forms/misc/989.html)

## Last verified

September 23, 2026. 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.

## About TipMax

California taxes every tip while the federal return deducts qualified ones, so tips logged per shift with monthly totals give you both numbers.

TipMax is an iPhone app for servers and bartenders that tracks tips and tip-outs and turns a restaurant menu into study flashcards.

Download TipMax free: https://apps.apple.com/us/app/tipmax-study-track-earn/id6744850146

---

TipMax Answers explains public IRS guidance in plain English for tipped workers. It is **not tax, legal, or accounting advice**. Rules can change. Confirm figures on IRS.gov and with a qualified tax professional before you file. TipMax the app helps you track tips and true hourly pay; it does not file your taxes.