(NEXSTAR) — In the previous month, the House approved the “One Big Beautiful Bill Act” — a legislative bundle that includes tax reliefs, budget reductions, border security financing, among other key priorities aligned with President Donald Trump’s agenda — and forwarded it to the Senate. On Monday, a look into the Senate GOP’s version of this “big, beautiful bill” was revealed when the Finance Committee disclosed parts of its provisions.
As reported by Nexstar’s The Hill, the committee’s budget bill version proposes making many core elements of the 2017 tax cuts permanent, while also reducing some additional cuts from the House’s version.
Among the provisions outlined by Senate Republicans is one targeting taxes on overtime pay.
The House bill proposes a tax break that would eliminate income taxes on the premium pay for overtime for over 80 million hourly workers. This would allow a temporary full deduction for qualifying overtime pay that employees receive, with the provision set to conclude after 2027.
Under the current version of the Senate’s bill, however, overtime pay would be deductible up to $12,500 or $25,000 for joint filers through 2028, The Hill reports. Tax breaks on tipping and car loan interest would also be capped.
A scaled-back take on the “One Big Beautiful Bill” isn’t much of a surprise; some Senate Republicans had expressed frustration over the legislation, saying it needed deeper cuts.
It’s worth noting that, if the no-tax-on-overtime provision remains in the bill, it would not give way to a larger paycheck after working extra hours. Instead, because it is a deduction, employees would claim the overtime pay on their taxes during the following year.
Qualifying for overtime pay may even be difficult, depending on an employee’s work industry.
Firefighters, for example, have to work 53 hours a week before qualifying for overtime, Edward Kelly, general president for the International Association of Fire Fighters, said in a statement obtained by NBC News last month.
The Tax Foundation said last year that exempting overtime from income tax, then a campaign promise of Trump’s, could encourage more employees to want to work overtime hours. It could, similarly, cause employers to “be more aggressive to contain overtime requests as total labor costs rise.” The Congressional Budget Office warned that exempting overtime pay from income taxes could lead to $124 billion in lost tax revenue.
It’s too soon to say how fast the bill could pass in the Senate, and what tweaks could be made.
Trump’s big bill is the centerpiece of his domestic policy agenda, a hodgepodge of GOP priorities all rolled into what he calls the “beautiful bill” that Republicans are trying to swiftly pass over unified opposition from Democrats — a tall order for the slow-moving Senate.
Fundamental to the package is the extension of some $4.5 trillion in tax breaks approved during Trump’s first term, in 2017, that are expiring this year if Congress fails to act. There are also new ones, including no taxes on tips, as well as more than $1 trillion in program cuts.
After the House passed its version, the nonpartisan Congressional Budget Office estimated the bill would add $2.4 trillion to the nation’s deficits over the decade, and leave 10.9 million more people without health insurance, due largely to the proposed new work requirements and other changes.
The Associated Press contributed to this report.
