So, Trump's "One Big Beautiful Bill" – or OBBBA, because who has time to say that whole thing? – promised us no taxes on overtime, right? Sounded great, especially after the last few years of… well, you know. But surprise, surprise, it's already falling apart.
Turns out, some states ain't buying what Trump's selling. Washington, D.C., New York, Illinois, Colorado...they're all finding ways to sidestep this "no tax on overtime" deal. Why? Because apparently, state budgets matter more than giving us a little freakin' break on our taxes. Richard Pon, some CPA out in San Francisco, says this OBBBA is "causing havoc on state budgets". Havoc! Like Trump ever cared about havoc. You can Some states axe Trump's federal tax benefits. What is Illinois excluding? read more about which states are excluding the bill.
It's always the same song and dance, isn't it? Promise the moon, deliver a rock, and then blame someone else when it all goes sideways.
And the IRS? Don't even get me started.
They announced penalty relief for employers in 2025 because they couldn't figure out how to report this "no tax on tips" and "no tax on overtime" crap on the W-2 forms. Seriously? The IRS is confused? That's like finding out your surgeon can't read an X-ray. What are we even paying these people for? The IRS has stated they IRS Will Not Impose Penalties Based on Reporting of “No Tax on Tips” and “No Tax on Overtime” for 2025 and will not impose penalties based on reporting of “No Tax on Tips” and “No Tax on Overtime” for 2025.
They encourage employers to give us the info anyway, through some "online portal" or "written statements." Give me a break. My employer still uses fax machines.
But here's the kicker: the IRS admitted the One Big Beautiful Bill didn't take effect until July 2025! So they expect employers to have all the data on what happened from January to June? That's pure comedy.
Well, if you live in one of the states that decided to "decouple" from the federal tax code—that's fancy talk for "screw you, taxpayers"—you're probably still going to get hammered on your overtime pay. And even if you don't, the whole thing is so confusing that you'll probably end up paying more in accountant fees just trying to figure it out.
Eric Clements from Thomson Reuters says, "You must pay close attention to state adjustments for the next few years, as each state’s approach differs." Oh, thanks, Eric. That's exactly what I wanted to hear. More complexity. More confusion. More ways for the government to pick our pockets.
And what is considered "qualified overtime" anyway? The premium portion? Voluntary overtime doesn't count? Who the hell knows?!
It's like they're deliberately trying to make this as opaque as possible. A tax system should be simple, transparent. But offcourse, that's too much to ask for.
Then again, maybe I'm just being cynical. Maybe this whole thing is actually a brilliant plan to stimulate the economy by forcing us to hire more accountants. Yeah, that's the ticket...
It's a mess. A complete, utter, predictable mess. Another broken promise from a politician who's probably golfing on some fancy course right now, laughing at all of us schmucks trying to make sense of this garbage.
