By Waterbury Times/Published Jan 27 2026

UPDATED MAR 31, 2026

Hartford- Recent national political rhetoric has renewed debate over whether tipped workers should pay income taxes on gratuities. Former President Donald Trump has publicly stated that tips should not be taxed, a position that has gained traction among service workers and voters across the country.

However, despite these statements, tips remain fully taxable in Connecticut, and there is currently no change in state law that would alter that reality.

Here’s why.

Federal Promises Do Not Override State Law

Any proposal to eliminate taxes on tips would first need to be passed by Congress and signed into law at the federal level. Even then, such a change would apply only to federal income taxes.

Connecticut, like most states, operates under its own tax code. The state is not required to adopt federal tax changes unless lawmakers in Hartford choose to do so.

Connecticut Taxes All Earned Income

Under current Connecticut law, tips are considered earned income and are subject to state income tax. This includes cash tips, credit card tips, and tip-sharing arrangements. Employers are also required to report tipped income, and workers are legally obligated to declare it.

To remove tips from state taxation, the Connecticut General Assembly would need to pass legislation specifically exempting them. As of January 2026, no such bill has been introduced or approved.

Campaign Statements Are Not Policy

While political statements can shape public discussion, they do not carry legal weight. No executive order or campaign pledge—past or present—can change Connecticut tax law without action from the state legislature.

Revenue and Budget Considerations

State officials have historically been cautious about narrowing the tax base. Exempting tips would reduce state revenue, particularly in industries such as restaurants, hospitality, and personal services—sectors with a strong presence in cities like Waterbury.

Any proposal to exempt tips would likely face debate over budget impacts, fairness across income types, and enforcement challenges.

What Would Have to Change?

For tips to stop being taxed in Connecticut:

1. Federal law would need to change (if the goal includes federal tax relief).
2. Connecticut lawmakers would need to pass a state-level exemption.
3. The Governor would need to sign the bill into law.

Until then, tips remain taxable income in Connecticut.

---

Spring 2026 Update: A Change May Be Coming

Update Mar 31, 2026

026 Update: A Change May Be Coming

As of the 2026 legislative session, Connecticut lawmakers are actively considering proposals that would eliminate the state income tax on tips — and in some versions, on overtime pay as well.

This is the first time in years that serious legislative discussion has taken place around removing tips from taxable income at the state level.

The reason this issue has gained attention is because federal tax treatment of tips changed in 2025. But Connecticut does not automatically adopt federal tax code updates. The state must pass its own law before any similar change takes effect here.

That’s why, despite federal changes, Connecticut still taxes tips today.

No bill has yet passed into law. But the debate is happening now in Hartford, and thousands of tipped workers across the state are watching closely.

If a bill does pass:

• Tips would no longer be subject to Connecticut income tax
• Take-home pay for service workers would increase immediately
• State tax treatment would finally align more closely with federal rules

Until that happens, the current rule remains:

If you earn it in tips, Connecticut still taxes it.

---

Bottom Line:
Despite national political promises, Connecticut workers should expect no immediate change to how tipped income is taxed. Any shift would require deliberate action from state lawmakers—not campaign slogans.

This article will be updated as Connecticut lawmakers consider changes to the taxation of tips during the 2026 session.

RELATED CAPITAL NEWS:

NEWS-CT H.B. 5468 Protecting Homeschooling Rights in Connecticut or Government Overreach?

NEWS-HB 5468 Homeschool Oversight Bill Draws Crowds, Sparks Debate at Hartford Hearing

STAY LINKED-CT Urban Affairs