Does Your State Tax Tips and Overtime in 2026? All 51 Jurisdictions

The federal OBBBA created two major new tax deductions: the tips income deduction (IRC §224, up to $25,000) and the overtime premium deduction (IRC §225, up to $12,500/$25,000 MFJ). But whether these deductions also reduce your state income tax depends entirely on your state's conformity status.

This page tracks the OBBBA conformity position of all 50 states plus the District of Columbia. It is compiled from official state tax authority publications, legislative tracking, and verified tax research. We update it as states issue new guidance.

Summary - 2026 OBBBA Conformity at a Glance

Bottom line: 17 of 51 jurisdictions either have no income tax or are expected to recognize the OBBBA deductions. 14 explicitly do not conform. 20 have not issued guidance - these are the states to watch.

Complete Conformity Table - All 51 Jurisdictions

States With No Income Tax (9)

These states impose no state income tax on wages, tips, or overtime pay. OBBBA conformity is not applicable - there is no state income tax to reduce. Workers in these states benefit fully from the federal deduction with no state-level complication.

• Alaska - no state income tax
• Florida - no state income tax
• Nevada - no state income tax
• New Hampshire - no state income tax
• South Dakota - no state income tax
• Tennessee - no state income tax
• Texas - no state income tax
• Washington - no state income tax
• Wyoming - no state income tax

States That Conform to Both Deductions (7)

These states recognize both the federal tips deduction (IRC §224) and the federal overtime deduction (IRC §225) at the state level. Workers in these states receive both federal and state tax savings when they claim the deductions.

States With Partial or Pending Conformity (1)

These states likely conform based on their IRC adoption mechanisms, but official deduction-specific guidance is pending. Workers should file conservatively and watch for updates from their state tax authority.

States That Do Not Conform (14)

These states explicitly do not recognize the OBBBA tips and/or overtime deductions. Workers in these states still benefit from the federal deduction but owe full state income tax on tips and overtime.

States With No Published Guidance (20)

These states have income taxes but have not issued official guidance on OBBBA conformity. This is the largest group and includes several major states (California, New York). Workers in these states should plan conservatively - assume the deduction does not apply at the state level until guidance confirms otherwise.

These are the states to watch. When a state in this list issues conformity guidance, we update immediately. States with pending legislation or expected announcements are actively monitored.

• Arkansas -Arkansas has its own income tax code. No AR DFA guidance on OBBBA tip income ...
• California -California has not enacted legislation conforming to the federal OBBBA tips i...
• Connecticut -Connecticut has its own income tax code (Conn. Gen. Stat. § 12-700 et seq.) a...
• Delaware -Delaware has its own tax code that partially conforms to the IRC. It is unkno...
• District of Columbia -likely_conforms_pending_explicit_guidance - DC generally conforms to IRC as...
• Hawaii -Hawaii has its own tax code and does not automatically conform to federal tax...
• Idaho -Idaho generally conforms to the Internal Revenue Code but may decouple from s...
• Kansas -Kansas has its own income tax code and does not automatically conform to all ...
• Louisiana -Louisiana uses federal AGI as a starting point. The OBBBA tips income deducti...
• Maine -Maine generally conforms to the IRC but may decouple from specific federal pr...
• Mississippi -Mississippi has its own income tax code. No MS DOR guidance on OBBBA tip inco...
• Missouri -No specific Missouri guidance found on OBBBA tip income deduction provisions ...
• Nebraska -Nebraska has its own income tax code (Neb. Rev. Stat. Chapter 77). No Nebrask...
• New York -New York has not announced conformity with federal OBBBA tips deduction provi...
• North Dakota -North Dakota conforms to the Internal Revenue Code for many purposes but it i...
• Oklahoma -Oklahoma uses rolling conformity with the federal IRC. However, no official O...
• Rhode Island -Rhode Island partially conforms to the IRC. It is unknown whether RI will ado...
• Vermont -Vermont conforms to federal tax law in many respects but it is unknown whethe...
• Virginia -date_conforms_deductions_pending - Virginia's IRC conformity date (December ...
• West Virginia -West Virginia has its own tax code. It is unknown whether WV will adopt OBBBA...

Methodology

This conformity tracker is compiled from official state tax authority publications, legislative databases, and verified secondary sources (accounting firm analyses, state bar tax section publications). For each state, we:

1. Check the state's IRC conformity date or adoption mechanism
2. Search for state-specific guidance on OBBBA individual income tax deductions
3. Review 2025-2026 legislative session actions on tax conformity
4. Verify with the state's published withholding formulas and form instructions
5. Monitor state DOR websites and published guidance documents

Every entry includes a source link to the official state authority where available. States marked "Unknown" have no published guidance as of the last-verified date. We err on the side of "Unknown" rather than inferring conformity - we only mark "Yes" when we have explicit confirmation.

Related Tools

• No Tax on Tips Calculator - calculate your federal tips deduction
• No Tax on Overtime Calculator - calculate your federal overtime deduction
• Schedule 1-A Estimator - combine all OBBBA deductions
• All State Tax Guides - full tax profiles for every state
• W-2 Code TP Guide - how tips are reported on your W-2
• W-2 Code TT Guide - how overtime is reported on your W-2