Sen. Roger Marshall, R-Kan., has proposed legislation that would turn President Donald Trump's onetime campaign promise of "no tax on overtime" into law but calls for some limits on the earnings.
Marshall's plan on cutting taxes on overtime pay calls for the break to end once the taxpayers' adjusted gross income reaches $100,000 for singles or $200,000 for married couples and capping the nontaxed income at $10,000 for single people or $20,000 for couples, reported The Wall Street Journal Tuesday.
The legislation would mean, at the 22% marginal tax rate, a taxpayer would save $4,400 in taxes on $20,000 in overtime pay.
Marshall's plan is part of the "one big, beautiful bill" that Republicans are pulling together in connection with Trump's agenda. Most of the bill would extend the tax cuts Trump and Republicans pushed through in 2017 during Trump's first administration.
Lawmakers, though, have also been squeezing in parts of the president's campaign promises, including no taxes on tips or Social Security benefits, lower tax rates for domestic manufacturers, and an interest deduction for people buying cars made in the United States.
Marshall has not estimated how much his bill would cost, but his limits in the bill would cause estimates of a larger tax break predicted by a think tank, running from $680 billion to $1.3 trillion over a decade.
According to the Yale Budget Lab, Marshall's plan could reduce the potential cost of the tax break bill by about 75%.
Marshall said his goal is to constrain the costs of the tax break plan, as well as target it to middle-income workers who work in occupations where overtime payments are commonly earned.
"Our legislation ensures Kansans keep more of their hard-earned wages and codifies a key pillar of President Trump's pro-worker agenda," Marshall commented.
Marshall is introducing the bill on Tuesday along with GOP Sen. Tommy Tuberville, Ala.; Pete Ricketts, R-Neb.; and Jim Justice, R-W.Va.
The bill also limits the overtime tax break to people who get at least 1.5 times their normal pay rate for working overtime through the Fair Labor Standards Act or an agreement with their employer.
Marshall's break plan further calls for an above-the-line deduction, meaning it can be claimed whether deductions are itemized or the worker takes the standard deduction. The workers would still pay payroll taxes.
Yale Budget Lab reports show that about 8% of hourly workers and 4% of salaried workers regularly draw overtime pay.
Marshall's plan is similar to a bill from Sen. Ted Cruz, R-Texas, and Rep. Vern Buchanan, R-Fla., which limits the break to $25,000 while denying it to households earning $160,000 or more a year.
Trump, meanwhile, has also called to eliminate taxes on Social Security benefits, but the money from that tax goes into the program's trust fund, so it is off limits for the budget reconciliation process that Republicans are seeking to get the bill passed without needing any votes from Democrats.
Lawmakers instead are calling to increase standard deductions that can be claimed by people ages 65 and older. Rep. Nicole Malliotakis, R-N.Y., has proposed increasing the deduction to $5,000 for individuals, up from $2,000, and to $10,000 from the current $3,200 for married couples.
The increase would come in addition to a general standard deduction of $15,000 for individuals and $30,00 for married couples.
Sandy Fitzgerald ✉
Sandy Fitzgerald has more than three decades in journalism and serves as a general assignment writer for Newsmax covering news, media, and politics.
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