North Carolina bill seeks to exempt reported tip income from state taxation

A bill introduced by State Sen. Dana Jones looks to lessen the tax responsibilities for workers by removing reported tip income from North Carolina income tax calculations, according to the North Carolina State Senate.

Designated as SB 983 and filed April 30 during the 2025 regular session, the measure is officially titled: ‘TIPs Tax Deduction.’

The following summary reflects our interpretation of the actual bill text to clarify its contents.

If enacted, this proposal would permit North Carolina taxpayers to deduct from state taxable income any tips they must report to an employer under section 6053(a) of the Internal Revenue Code. The bill would thereby exclude such reported tip income from state income tax, intending to provide relief to workers whose tips are already reported to the federal government. Its provisions would take effect for taxable years beginning on or after Jan. 1, 2026.

Among the bill’s three sponsors, Sophia Chitlik introduced the largest number of bills during the 2025 regular session, with a total of 78.

Bills in North Carolina undergo a step-by-step process before becoming law. After a bill is filed by a lawmaker, it is assigned to a committee for evaluation. Each chamber must read the bill three times. If either chamber amends the bill after passage in the other, both chambers must agree on the final version. Once both pass the same version, the bill is sent to the governor, who has 10 days (or 30 days if the assembly is not in session) to sign, veto, or allow it to become law without a signature.

Additional information about bills and legislative actions can be found here.

Jones earned a BA from High Point University in 1993.

A Republican, Jones was elected to the North Carolina State Senate in 2025 and now represents the 31st Senate district, succeeding previous senator Joyce Krawiec.