Does CaliforniaTax Tips & Overtime After the OBBBA?
California has conformity legislation pendingfor the federal OBBBA tip and overtime deductions. Here's what that means for your paycheck.
Compiled by Sharon Ben-Moshe · Conformity data verified August 1, 2026
Quick answer
California has a state income tax (about 9.3% used for estimates) and currently has conformity legislation pending. That means you may still owe state income tax on your tips and overtime even though your federal tax is reduced.
Tips deduction
Pending
Overtime deduction
Pending
Details for California
California currently taxes tips and overtime as ordinary income. AB 1550, which would conform to the federal deductions for 2026-2028, remains pending in the Assembly Revenue and Taxation Committee.
Last verified August 1, 2026.
How OBBBA tips & overtime work in California
The OBBBA is a federal deduction: eligible workers can deduct up to $25,000 of tips and $12,500 of overtime premium ($25,000 if married filing jointly) from federal taxable income through 2028. Whether California follows suit depends on state conformity. FICA (Social Security and Medicare) applies everywhere. Learn more about the tip deduction and the overtime deduction.
How this is sourced: California's conformity status is tracked against state legislation and primary IRS guidance, and re-verified as the law changes. See our methodology and sources.