Taxes On Tips And Overtime Gone For Good? Here’s What We Know

During his presidential campaign, Donald Trump repeatedly proclaimed his pro-worker ideals by promising to end taxation on overtime pay and tips. Last September, he highlighted the burden these taxes place on workers in hospitality, delivery, and gig economies. He again doubled on his promise during the election campaign, declaring that he would abolish these taxes once elected.

Yesterday, Congress passed a new budget resolution, setting the stage for government spending in the future. In light of the President’s previous statements, everyone expected this bill to include removing taxes on tips and overtime. Now, they are left wondering if the resolution actually conforms to his campaign pledges.

Did the no tax on overtime bill get passed?

For those seeking quick relief from overtime and tip taxation, Tuesday’s passed bill has nothing for them directly. The resolution holds no specific wording to remove tax on tips and overtime pay. If such tax cuts were to become realities, they must be introduced as their own bill and voted into law by the House and Senate.

The bill, however, must still undergo multiple steps, including reconciliation with the Senate bill, before it reaches the President’s desk to be signed into law. Under the proposed plan, if the bill passes, workers who are working the additional hours would receive their overtime pay unburdened by federal income tax.

What is included in the budget resolution plan?

The verdict might not have wiped out taxes on overtime or tips, but it sets the stage for more inclusive fiscal policies. It determines government budget priorities and demands several committees to cut billions in federal expenditure.

The House passed the budget resolution 217-215, while the Senate approved a different version. Congress must now reconcile the two into one bill. The resolution is more focused on longer-term fiscal change, such as $4.5 trillion in tax relief and $2 trillion in discretionary spending cuts over the next ten years.