At a rally in Tucson, Arizona, President Donald Trump made an unprecedented promise to eliminate all taxes on overtime pay, marking a bold new proposal from the federal government. This pledge is part of a broader set of tax cuts, one of which has gained enough popularity to reportedly push Kamala Harris to adopt it as her own.
“We will end all taxes on overtime,” Trump declared. “You know what that means? Think about it.”
Trump argued that removing taxes on overtime would provide a strong incentive for Americans to work more, while also making it easier for businesses to recruit and retain employees.
“It’s time for the working man and woman to finally catch a break,” Trump continued. “The people who work overtime are among the hardest-working citizens in our country. And for too long, no one in Washington has been looking out for them. They’re police officers, nurses, factory workers, construction workers, truck drivers, and machine operators.”
In 2019, the Trump administration’s Labor Department implemented a rule making overtime pay available to an additional 1.3 million workers by raising the salary threshold for mandatory overtime. While millions benefited from this change, Democrats and some labor activists criticized it as less generous than a failed Obama-era proposal.
Building on this, the Biden administration announced a new rule in 2024 that further increases the salary threshold for overtime pay. But with Trump’s proposed policy, many Americans would no longer have to see their hard-earned overtime earnings taxed.
Reuters noted that although this proposal is a first for the federal government, Alabama became the first state to exempt overtime wages for hourly workers from state taxes earlier this year, albeit temporarily.
According to the Tax Foundation, Trump has also proposed:
- Exempting tips from income taxes,
- Reducing the corporate income tax rate from 21% to 20%, with a lower 15% rate for companies manufacturing in the U.S.,
- Making permanent his 2017 individual income tax cuts,
- Potentially replacing personal income taxes with increased tariffs on imports,
- Exempting Social Security benefits from income taxes, and
- Imposing a 60% tariff on imports from China.
The Harris campaign did not take Trump’s announcement lightly. A spokesperson for Harris stated, “He is desperate and scrambling, saying whatever it takes to try to trick people into voting for him.” It remains unclear whether Harris, who has been accused of copying policies from her former running mate, will also claim this proposal for her own.
