Overtime Tax Cuts Featured in GOP Budget Proposal

In a recent budget and tax bill released by US Republicans, one of President Donald Trump’s key priorities has been included: there’s no tax on overtime payments.

The bill outlines various tax cuts, with certain deductions set to expire by the end of 2028. Trump expressed his views, stating, “We don’t have taxes on tips, taxes on social security for the elderly, taxes on overtime. This will be the largest tax cut for middle and working-class Americans, and it’s time for Main Street to win.”

Support for this initiative has been solid among US Senators, particularly from Alabama, where the proposal has been introduced in the Senate. Senator Tuberville noted, “President Trump campaigned and promised tax cuts for millions of working Americans, especially those putting in overtime, and we’re fulfilling that promise. Thousands of Alabamians work more than 40 hours a week to save for retirement and help their children with college.”

However, the enthusiasm in Washington contrasts with actions taken by Montgomery lawmakers, who chose to let state income tax cuts on overtime payments lapse this year.

During a discussion on Alabama’s public television program “Capitol Journal,” House Speaker Nathaniel Ledbetter reflected on the decision not to extend the cuts. He mentioned that while he supported the idea initially, financial projections indicated a potential $30 million expense, which could impact funding for education, such as classroom updates or demolitions in rural areas.

Instead, lawmakers have opted to reduce the state’s grocery tax from 3% to 2%, a change that will take effect on September 1, 2025.