One of the most notable features of President Donald Trump’s “big beautiful bill” passed by the House early Thursday is a series of tax cuts exempting tips, overtime, and Social Security from taxes. The White House said no taxes on overtime and tips “makes good on two of President Trump’s cornerstone campaign promises and benefits hardworking Americans where they need it the most—their paychecks.”
The so-called populist tax measures have garnered headlines and won praise from Republican lawmakers, as well as unions representing police and firefighters. And lawmakers in 19 states from Massachusetts to Mississippi have proposed their own “no tax on overtime” bills this year, according to the Economic Policy Institute.
You can’t benefit from ‘no taxes on overtime’ if you’re not even paid overtime.
What has received far less attention, aside from a legal blog or two, is that the Trump administration just made it more difficult for millions of American workers to earn overtime—and actually benefit from the tax measure.
The U.S. Department of Labor has quietly paused its appeals of a ruling by a Texas judge that reversed the Biden administration’s changes to the overtime rule—which expanded the right to overtime pay for 4.3 million salaried American workers. The rule had increased the salary threshold for overtime exemption from $35,568 to $43,888 on July 1, 2024, and then to $58,656 on January 1, 2025.
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The rule was spearheaded by Biden administration Secretary of Labor Julie Su, who noted the irony of Trump’s tax proposal on overtime pay, telling Capital & Main:
“You can’t benefit from ‘no taxes on overtime’ if you’re not even paid overtime.”
She added: “When you work longer hours, you should be paid for it. That’s why we expanded overtime pay to 4 million more Americans. This administration has walked away from that rule, showing yet again that you can’t have an administration of billionaires and depend on them to fight for working people. Cutting the number of workers eligible for overtime means less money in workers’ pockets.”
Judy Conti, government affairs director of the National Employment Law Project, called the tax measure a “gimmick,” noting that the Trump administration “is already making it easier to classify people as independent contractors, rather than employees, and they aren’t entitled to overtime at all.”
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Read the full story at capitalandmain.com.
