Indiana Senate Passes No Tax on Tips, No Tax on Overtime Bill

Thursday, February 5, 2026 at 10:51 AM

By Travis Thayer @eagle993

The bill now heads to the House for further consideration.

Shutterstock photo.

INDIANAPOLIS - A bill co-authored by State Sen. Ron Alting (R-Lafayette) that would couple Indiana's tax code to the federal tax code regarding no tax on tips and no tax on overtime passed the Senate on Wednesday, Jan. 28 with bipartisan support by a vote of 47-1.

Senate Bill 243 would allow Hoosiers to deduct qualifying tips and overtime pay from their state taxable income for 2026. This is expected to save Hoosiers up to $237 million on state and local taxes.

"As someone who has worked in the restaurant and hospitality industries most of my life, I know this tax cut would help Hoosiers who could really use the help," Alting said. "This bill builds on our state's track record as one of the most taxpayer-friendly states in the nation, having cut taxes over 20 times in the last 10 years, and I look forward to working with my colleagues to find new ways to save Hoosiers money."

These tax cuts would apply to 2026 wages on tax returns filed in 2027.

SB 243 now heads to the House of Representatives for further consideration.

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