In a campaign promise made on Thursday, Republican presidential candidate Donald Trump vowed to eliminate taxes on overtime pay as part of a broader tax reform package if he wins the November 5 election.
“We will end all taxes on overtime as part of our additional tax cuts,” Trump announced during a rally in Tucson, Arizona. “Your overtime hours will be tax-free.”
Trump, who is facing Democratic Vice President Kamala Harris in a closely contested race, has previously proposed cutting taxes on tips to help service industry workers. Harris has made similar commitments regarding tax relief for workers.
A spokesperson for the Harris campaign responded to Trump’s latest proposal, saying, “He is desperate and will say anything to win votes.”
Earlier this month, Harris accused Trump of preventing millions of workers from receiving overtime during his presidency from 2017 to 2021.
In 2019, the Trump administration increased the threshold for overtime eligibility, allowing 1.3 million more workers to qualify. However, critics argued that the policy fell short compared to an earlier proposal by former President Barack Obama, which would have expanded overtime eligibility to nearly 5 million workers.
Trump raised the salary cap for overtime exemptions to $35,568 annually, while Obama’s plan had aimed to increase it to over $47,000. The Obama-era rule was ultimately struck down in court.
Overtime pay, which primarily benefits blue-collar workers such as fast-food employees, nurses, and retail staff, must be paid at time-and-a-half for hours worked beyond 40 in a week, according to Labor Department rules.
“The hardest-working people in this country are those who rely on overtime, and they deserve better representation in Washington,” Trump said.
While the financial impact of eliminating taxes on overtime is unclear, it is expected to reduce government revenue. Trump’s earlier tax cuts, if made permanent, would add $3.5 trillion to the U.S. deficit by 2033, according to the Congressional Budget Office. The budget deficit for the first 11 months of this fiscal year has already reached $1.9 trillion.
Trump’s proposal is unprecedented at the federal level, although Alabama became the first state to temporarily exempt overtime wages from state taxes earlier this year to address job shortages. That exemption lasts for 18 months.
