Trump's Proposal to Eliminate Overtime Pay Taxes If Elected

Republican U.S. presidential candidate Donald Trump announced a plan to eliminate taxes on overtime pay as part of a broader tax cut package if elected. The proposal aims to support blue-collar workers, but has sparked controversy and comparisons to previous administrations' policies. The impact on government revenue is uncertain.

Republican U.S. presidential candidate Donald Trump announced on Thursday that he plans to eliminate all taxes on overtime pay if elected in the upcoming November 5 election. Speaking at a rally in Tucson, Arizona, Trump stated, "As part of our additional tax cuts, we will end all taxes on overtime. Your overtime hours will be tax-free."

Trump, who is running against Democratic Vice President Kamala Harris in what polls suggest is a tight race, has also previously mentioned plans to end the taxation of tips to support service workers. Harris has made a similar commitment. The topic of overtime pay has recently become a significant campaign issue between Trump and Harris.

At a recent event with union workers, Harris accused Trump of preventing millions of workers from receiving overtime during his previous term. In 2019, the Trump administration issued a rule increasing overtime pay eligibility to 1.3 million additional U.S. workers, which replaced a more extensive proposal from former President Barack Obama. Trump's administration set the salary level for overtime pay exemption to $35,568 annually, up from the previous threshold of $23,660, a move criticized by workers' rights groups for covering fewer employees than Obama's proposal.

Overtime pay at these income levels primarily benefits blue-collar workers such as fast-food staff, nurses, store assistants, and other low-income employees. "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," Trump said. Under current Labor Department rules, eligible workers must be paid at least time-and-a-half for hours worked beyond 40 hours in a workweek.

Ending overtime pay taxes could lead to reduced government revenue. Trump's plan to make his previous tax cuts permanent would reportedly increase the U.S. deficit by $3.5 trillion through 2033. As of the first 11 months of this fiscal year, the budget deficit stands at $1.9 trillion. While the exact revenue from overtime taxes is unclear, Trump's proposal marks a first for the federal government. Alabama recently became the first state to exclude overtime wages for hourly workers from state taxes temporarily to help with a tight labor market.

(With inputs from agencies.)