The truth behind Trump’s “no tax” promises on tips, overtime, and Social Security
By Michael Jones
When Republicans campaigned to retake full control of Washington in 2024, their tax agenda was clear: Extend the 2017 Trump cuts.
But rather than simply running on making his first-term tax law permanent, Donald Trump threw in three new promises aimed at working-class workers frustrated by inflation: No tax on tipped income, no tax on overtime pay, and no tax on Social Security benefits.
The pledges were politically potent but expensive. Combined, they would make enacting Trump’s full tax agenda trillions of dollars more costly.
Faced with that price tag, congressional Republicans watered down or means-tested all three provisions in the Senate-passed bill that the House will vote to send to President Trump’s desk as early as today. Yet Trump has continued to claim—at White House events and in recent Truth Social posts—that the bill fulfills his promises.
And that gap between rhetoric and reality matters because these worker-focused provisions are among the most popular in the package. But as Trump’s framing circulates largely unchallenged and House Republicans are hours away from sending the legislation to his desk to be signed into law by his self-imposed Independence Day deadline, it risks obscuring what the bill does and who it’s designed to benefit.
Rep. Steven Horsford (D-Nev.), who represents more tipped workers than any other member of Congress and serves on the House Ways and Means Subcommittee on Social Security, said the bill’s priorities don’t match the promises Trump is making.
“On one hand, they are cutting health care. On the other, they are giving tax breaks to the wealthy,” he told me. “On one hand, they’re saying they’re helping working-class people. On the other hand, the benefits, if there are any, are temporary, and the benefits for billionaires are permanent.”
The Senate bill allows eligible employees to deduct qualified cash tips from their federal taxable income for the years 2025 through 2028. The deduction does not apply to payroll taxes, so Social Security and Medicare taxes still apply. Workers must meet specific documentation and wage reporting requirements to be eligible for the deduction. This version preserves the temporary nature of the benefit, limiting it to federal income taxes only, rather than providing a full tax exemption.
The final bill also created a federal income tax deduction for overtime pay earned by non-exempt workers under the Fair Labor Standards Act. The deduction applies only to wages that are earned in addition to regular pay, not base earnings. It’s available to workers earning less than $160,000 in 2025 and fully phases out for those earning above that amount. Like the tip provision, it’s temporary, expiring after 2028, and does not affect payroll taxes.
The bill introduces a new temporary deduction for seniors receiving Social Security, distinct from the current age-based standard deduction. The Senate version sets the deduction at $6,000 per individual from 2025 through 2028, and allows it to be claimed by both standard and itemizing taxpayers. The deduction phases out for individuals with modified AGI (Adjusted Gross Income) over $75,000 and joint filers over $150,000, and is fully phased out at $175,000 and $250,000, respectively. This change does not repeal the taxation of Social Security benefits, but instead offers a limited, means-tested deduction.
Compare these provisions to the president’s promises and you’ll see all sorts of daylight.
Trump’s proposal to eliminate federal income taxes on tipped income was estimated to cost roughly $11 billion over ten years, according to the Joint Committee on Taxation. The plan would have exempted tips from federal income taxes entirely, though not from Social Security or Medicare payroll taxes.
His call to eliminate taxes on overtime pay carried a far larger price tag. A full income tax exemption for overtime wages—targeted at hourly workers—was projected to cost about $124 billion over the same period. That figure assumes the policy would expire after 2028, as originally proposed; making it permanent would drive the cost higher.
The third proposal—ending federal taxation of Social Security benefits for seniors—was among the most expensive, with early estimates pegging the cost at around $60 billion over a decade. While full repeal would have been more costly, Trump’s plan was framed as a deduction for seniors, meaning only a portion of Social Security income would have been shielded from taxes, and only for certain income levels.
The cost of these proposals only tells half of the story. Each also posed serious administrative challenges that experts warned could make implementation difficult, inefficient, or prone to abuse.
While the tax breaks for workers are set to expire after 2028, the bill locks in permanent tax relief for high-income earners and large corporations. It extends the 20-percent pass-through income deduction, boosts the estate tax exemption, and makes the corporate full expensing provision permanent, allowing businesses to write off equipment and machinery costs indefinitely. It also includes international tax changes favorable to multinationals and restores a more generous research and development deduction, a top priority for corporate lobbyists.
Many of Trump’s misleading claims about eliminating taxes on tips, overtime, and Social Security benefits have gone largely unchallenged by Democrats. That’s partly because tax policy is notoriously difficult to explain in a fast-moving media environment where attention spans are short and misinformation spreads quickly. It also didn’t help that Republicans advanced the reconciliation package on an accelerated timeline, leaving little room for sustained scrutiny or organized response.
On top of that, Democrats on the Hill have been juggling a constant churn of domestic and international crises under Trump’s second term, which has stretched their bandwidth even further. Democratic leaders chose early on to focus their opposition on the bill’s deep cuts to Medicaid and SNAP programs, which have real-world consequences that voters can more easily understand. But that focus has left a vacuum around the tax provisions, allowing Republicans to take a victory lap for promises that were only partially fulfilled.
Whether Democrats shift their messaging remains to be seen.
Some Democratic lawmakers and aides have privately acknowledged the popularity of the worker-facing tax proposals, even in their scaled-down form, and have expressed concern that failing to correct the record could allow Trump and Republicans to claim sole credit for middle-class relief. Others argue that the party is better served by staying focused on core safety-net cuts that threaten people’s healthcare, food access, and economic stability.
But as the reconciliation package moves toward becoming law, the contrast between what Trump promised and what the bill actually delivers may become increasingly difficult to ignore. Ultimately, that gap may be just as consequential as any provision in the legislation.
Michael Jones is an independent Capitol Hill correspondent and contributor for COURIER. He is the author of Once Upon a Hill, a newsletter about Congressional politics.
