Donald Trump has often made grand promises during his campaign speeches, from fixing the economy to ending daylight saving time, as well as outlining a series of tax changes. One of the more recent pledges he made leading up to the 2024 presidential election was the elimination of taxes on overtime pay. In a rally in Tucson, Arizona, Trump told the crowd, “If you’re an overtime worker, when you’re past 40 hours a week, your overtime hours will be tax-free.” However, this promise was vague, with little elaboration on how it would be implemented or what the full scope would be.
Will Trump Keep His Promise to Exempt Overtime Pay from Taxes?
The real question is whether Trump will actually follow through on this. There are several obstacles that could make this promise harder to achieve. First, only a small percentage of the workforce currently qualifies for overtime pay. Thanks to recent updates by the Biden administration, more salaried workers have become eligible for overtime, but the total number of workers who qualify remains relatively small—around 8% of hourly workers and 4% of salaried workers. This means that even if Trump were to make good on his promise, the number of people affected would be limited.
Moreover, eliminating taxes on overtime pay would add a significant burden to the federal deficit. The Yale Budget Lab estimates this policy could cost $866 billion over ten years, while other groups, like the Tax Foundation, predict a slightly lower cost of $680.4 billion over the same period. These numbers raise concerns about whether the government would be able to afford such a policy without adding to the growing deficit, especially when combined with other tax cuts Trump has proposed.
Trump has suggested that tariffs could help offset the costs of tax cuts, though this would likely lead to higher consumer prices. He’s also called for a new agency, led by Elon Musk and Vivek Ramaswamy, to seek out wasteful government spending, though it remains unclear how effective or legitimate this initiative would be.
Ultimately, whether Trump’s proposal on overtime pay becomes a reality will depend on his ability to navigate these challenges and whether Congress supports such a policy. But given Trump’s track record of offering ambitious yet often vague policy ideas, it remains to be seen whether he can truly deliver on this promise, or whether it will fall by the wayside as his administration pursues other priorities.