New Trump tax bill would kill taxes on tips, overtime, and Social Security

President Donald Trump’s new tax plan just ripped a hole through decades of tax policy. His latest push would erase federal taxes on tips, overtime pay, and Social Security benefits. This comes as Republicans prepare to bulldoze the bill through Congress without needing a single Democrat. According to CNBC, the House Ways and Means Committee dropped an early version of the text Friday evening. It’s not final, but it reveals how far Trump is ready to go to rewrite how Americans get taxed. The committee plans to debate the legislation Tuesday. Since Republicans control the White House, the Senate, and the House, they’re using a process called reconciliation. It lets them skip the filibuster and pass it with a simple majority. But even with that shortcut, things won’t be smooth. The budget rules are tight, and there are already fights within the GOP over how much this whole thing will cost. Republicans want extensions, but limits could block them Alex Muresianu, a senior policy analyst at the Tax Foundation, said it straight: “The narrow Republican majority in the House is going to make that process very difficult.” That’s because just a few holdouts can shut everything down. And some of them are already complaining about the size of the bill. Shai Akabas, VP of economic policy at the Bipartisan Policy Center, said a few members are demanding a “more fiscally responsible package,” which could kill or shrink some of the new perks. At the center of this is Trump’s 2017 law, the Tax Cuts and Jobs Act (TCJA). That law gave deep tax cuts to both businesses and individuals. It lowered brackets, hiked the standard deduction, increased the child tax credit, and gave a 20% break to pass-through businesses. Unless Congress steps in, most of those perks vanish after 2025. The new bill tries to stop that. It extends some parts permanently and some temporarily. The draft includes inflation fixes to tax brackets, a longer life for the pass-through deduction, and an expansion of the child tax credit to $2,500 per kid from 2025 to 2029. That’s up from the current $2,000. Trump wants that increase even though a bipartisan bill to do it already failed in the Senate earlier this year. Trump wants to scrap taxes on tips and Social Security Another fight is brewing over the SALT deduction—that’s the cap on how much in state and local taxes you can write off. The 2017 law capped it at $10,000, mainly to help pay for the other cuts. Before that, filers who itemized could claim unlimited SALT write-offs unless the alternative minimum tax limited them. That cap expires after 2025 too. High-tax states like California, New York, and New Jersey want it gone. And now, in a rare flip, Trump supports lifting it. But nothing about SALT is in the draft yet. Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center, said lifting the cap mostly helps upper-middle-class people, since low-income folks don’t usually itemize. Outside the TCJA extensions, Trump is gunning for three headline changes: no taxes on tips, overtime, or Social Security. These were campaign promises, and while they didn’t make it into the draft yet, Trump hasn’t backed off. There are real questions about how that would even work. Muresianu said one risk is “reclassification of income.” Basically, people could try to cheat the system by calling normal pay “overtime” or “tips.” But he added, “There are ways you could mitigate the damage.” Cryptopolitan Academy: Tired of market swings? Learn how DeFi can help you build steady passive income. Register Now Source: https://www.cryptopolitan.com/trump-tax-bill-tips-overtime-social-security/