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Tax Year 2026Updated July 13, 2026

Does Wyoming Tax Tips in 2026?

No – Wyoming does not tax tips because it has no state income tax. The Wyoming Constitution (Article 15, Section 18) prohibits a state income tax. Wyoming has never levied a personal income tax and constitutionally cannot do so without a voter-approved amendment. Tip income, wages, and all other personal income are completely free from state taxation. Tipped workers benefit from the federal OBBBA tips deduction (IRC §224) on their federal return and owe zero state income tax.

How Wyoming's Tips Tax Treatment Works

Wyoming's Constitution explicitly prohibits a state income tax. Article 15, Section 18 states that no tax shall be imposed upon income. This prohibition is among the clearest and most direct of any state's constitutional language on income taxation. Unlike states that simply lack an income tax by legislative choice, Wyoming's ban is constitutionally embedded.

Because Wyoming has no income tax system, the question of OBBBA conformity does not arise. There is no state tax code, no state AGI calculation, and no state income tax return to file. Tip income is simply not taxed at the state level in Wyoming – period.

Wyoming's ability to operate without an income tax stems from its abundant mineral wealth. The state is the nation's largest coal producer and a major producer of oil, natural gas, and trona (used in soda ash production). Mineral severance taxes – levied on extraction companies, not individual workers – are Wyoming's primary revenue source. This mineral-based funding model, combined with a 4% state sales tax and federal mineral royalties, allows Wyoming to maintain one of the lowest overall tax burdens in the country.

Federal Tips Deduction Quick Reference

DetailValue
IRC Section§224 (OBBBA)
Maximum deduction$25,000 tips
Deduction typeAbove-the-line (Schedule 1-A)
FICA still applies?Yes (Social Security 6.2% + Medicare 1.45%)
MFS eligible?No (MFJ or Single/HoH only)
Effective datesJan 1, 2025 – Dec 31, 2028
Wyoming treatmentDoes not conform

Worked Examples Comparing Federal and Wyoming Treatment

Example 1: Jackson Hole restaurant server (single filer, $40,000 income, $15,000 in tips)

Federal return:
Qualified tip income: $15,000
Tips deduction claimed: $15,000 (capped at $25,000)
Estimated federal tax savings: $1,800.00

Wyoming return:
Wyoming has no state income tax. There is no state tax on tips, wages, or any other personal income in Wyoming. The $15,000 in tip income is taxed only at the federal level. Wyoming's revenue comes from mineral severance taxes – not personal income taxes.

Example 2: Yellowstone lodge worker (single filer, $46,000 income, $16,000 in tips)

Federal return:
Qualified tip income: $16,000
Tips deduction claimed: $16,000 (capped at $25,000)
Estimated federal tax savings: $1,920.00

Wyoming return:
Wyoming imposes no state income tax on individuals. The $16,000 in tips faces only federal income tax and FICA payroll taxes. Wyoming's constitutional ban on income taxation (Article 15, Section 18) covers all forms of personal income including tips.

Wyoming – Mineral Wealth Funds Government, Not Income Taxes

Wyoming's no-income-tax status is directly tied to its extraordinary natural resource wealth. As the nation's top coal-producing state and a major producer of oil, natural gas, and trona, Wyoming generates substantial revenue from mineral severance taxes on extraction companies. This revenue – combined with federal mineral royalties shared with the state – has made an income tax unnecessary throughout Wyoming's history.

The constitutional prohibition on income taxation (Article 15, Section 18) provides an additional layer of protection. Even if mineral revenues declined significantly, the legislature could not impose an income tax without amending the state Constitution through a supermajority legislative vote followed by voter approval.

Tourism workers in Wyoming: Wyoming's tourism industry, centered around Yellowstone National Park, Grand Teton National Park, and the Jackson Hole resort area, employs thousands of tipped workers during peak season. Restaurant servers, hotel staff, ski resort workers, and wilderness guides all benefit from Wyoming's no-income-tax status. Combined with the federal OBBBA tips deduction of up to $25,000, these workers can significantly reduce their tax burden. Wyoming's low population and limited cost-of-living pressures (outside Jackson Hole) further benefit tipped workers in the state.

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Frequently Asked Questions

Does Wyoming tax tips or any other personal income in 2026?
No. Wyoming's Constitution (Article 15, Section 18) explicitly prohibits a state income tax. Wyoming has never had a state income tax and constitutionally cannot enact one without a voter-approved amendment. Tips, wages, salaries, and all other forms of personal income are completely free from state income taxation in Wyoming.
How does Wyoming fund government without an income tax?
Wyoming relies heavily on mineral severance taxes – taxes on the extraction of coal, oil, natural gas, trona, and other minerals. Wyoming is the nation's largest coal-producing state and a major oil and gas producer. Revenue from mineral extraction, combined with state sales tax (4% state rate plus up to 2% local), federal mineral royalties, and investment earnings, funds state and local government without any need for personal income taxation.
What taxes do tipped workers in Wyoming still pay?
Wyoming tipped workers pay federal income tax (reduced by the OBBBA deduction of up to $25,000), Social Security tax (6.2%), and Medicare tax (1.45%, plus 0.9% for high earners). Wyoming has a 4% state sales tax (plus up to 2% in local additions). Wyoming has no state payroll tax on employees, no corporate income tax, and no local income taxes. The overall individual tax burden in Wyoming is among the lowest in the nation.
What is Wyoming's mineral severance tax and does it affect tipped workers?
Wyoming's mineral severance tax is levied on companies that extract natural resources (coal, oil, gas, trona, uranium, etc.) from the ground. The tax rates vary by mineral type. This tax applies only to extraction companies – not to individual workers or their wages. Tipped workers in the hospitality industry have no exposure to the mineral severance tax. It is Wyoming's primary revenue source and the reason the state can operate without an income tax.
Is Wyoming's no-income-tax status constitutionally protected?
Yes. Wyoming's Constitution (Article 15, Section 18) prohibits the state from levying any tax upon income. This constitutional provision means the Wyoming legislature cannot enact a personal income tax through ordinary legislation – it would require a constitutional amendment approved by two-thirds of both legislative chambers and a majority of voters. This provides strong and durable protection against future income taxation.
Do Jackson Hole and other Wyoming tourist areas have local income taxes?
No. No city, town, or county in Wyoming imposes a local income tax. Teton County (which includes Jackson Hole), Yellowstone-area communities, and all other Wyoming jurisdictions have zero local income tax. Some municipalities impose local sales taxes (up to 2% above the state rate) and lodging taxes, but these do not apply to worker income. Tipped workers in Wyoming's busy tourism industry owe zero state or local income tax on their tips.