Overtime, Tips And Car Loans: These Are The Tax Breaks Congress Is Mulling

If you work overtime, are paid tips, or bought a car lately, Congress is considering cutting your taxes as part of the budget bill currently being negotiated. 

The 2025 federal budget process cleared a major milestone Tuesday when the House of Representatives passed a resolution outlining an agenda of trillions of dollars worth of tax and budget cuts.

The details of the budget have yet to be hammered out. However, they will likely include extending the 2017 Tax Cuts and Jobs Act and possible further tax cuts, such as eliminating taxes on overtime pay, tips, auto loan interest, and other tax breaks promised by President Donald Trump during the presidential campaign.

According to a memo circulated last month by the House Ways and Means Committee, here are the breaks currently under consideration, along with how much each would increase the federal deficit over a 10-year period.

The most far-reaching individual tax break being considered is the elimination of income taxes on overtime pay. Under U.S. labor laws, employers must pay workers 1.5 times their normal salary for any time worked over 40 hours a week. However, the rule doesn’t apply to teachers, self-employed people, “white-collar” workers, and people in many other circumstances.

A rule created by the administration of former President Joe Biden would have raised the salary threshold for overtime eligibility, making millions more eligible, but a federal court struck it down last year.

Although 60% of workers are eligible for overtime pay, only about 8% of hourly and 4% of salaried workers collect it on a regular basis, according to an analysis by the Yale Budget Lab.