Trump taxes

WASHINGTON—A new Republican proposal aims to turn President Trump’s open-ended “no tax on overtime” slogan into a practical reality, denying the new deduction to some top earners and capping it at $10,000 for individuals and $20,000 for married couples.

Under the legislation from Sen. Roger Marshall (R., Kan.), the break for overtime pay would start phasing out once individual adjusted gross income reaches $100,000 or when a married couple’s income reaches $200,000. At the 22% marginal tax rate that applies to many taxpayers in this range, a deduction for $20,000 in overtime pay would save $4,400 in taxes. 

Marshall’s proposal is a candidate for inclusion in the giant tax-and-spending bill that Republican lawmakers are assembling to carry Trump’s agenda. Most of that “one big, beautiful bill” would extend expiring tax cuts that Trump and Republicans passed in 2017, but Congress is also trying to squeeze in versions of the president’s campaign-trail tax-cut slogans.

Marshall’s bill, slated for introduction Tuesday, would limit the overtime-pay break to people who get at least 1.5 times their normal pay rate, either under the Fair Labor Standards Act or an agreement with their employer. 

The break would be an above-the-line income tax deduction. That means workers can claim it whether they itemize deductions or take the standard deduction. They would still pay payroll taxes on the income. 

According to the Yale Budget Lab, about 8% of hourly workers and 4% of salaried workers regularly work overtime.