Marketplace All-in-One The realities of No Tax on Tips and Overtime laws
Jul 24, 2025
Kristin Schwab, a reporter specializing in economic policy, sheds light on the implications of the new tax law eliminating taxes on tips and overtime. She discusses how this change may not deliver the expected benefits for American workers. The conversation dives into the complexities of navigating these laws, the potential economic impact of a shift in tipping culture, and the challenges workers and employers may face. Plus, a surprise guest appearance by Kimberly's cat adds a fun twist!
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Complexity of No Tax on Tips
- The "No Tax on Tips" law is complex and pending detailed IRS regulations for specifics on coverage.
- It affects workers in commonly tipped jobs and involves deductions that reduce taxable income, not full exemptions.
Overtime Tax Break Clarified
- The tax break on overtime only applies to the half portion of overtime pay, not the full amount.
- Deductions reduce taxable income but don't mean workers keep the entire tip or overtime pay untaxed.
Limited Reach of Tax Breaks
- Approximately 4 million workers, or about 2.5% of U.S. workers, will benefit from the tip tax break.
- The number of workers benefiting from the overtime provision is smaller and harder to estimate.