Joe Biden hammered working Americans with the worst inflation in 40 years.
Trump promised to deliver relief.
And the IRS just dropped Trump's tax break that will put thousands back in workers' pockets.
Trump Delivers on Campaign Promise to Help Working Americans
The Internal Revenue Service released guidance on New Year's Day for President Trump's "no tax on tips" and "no tax on overtime" deductions that were part of the One Big Beautiful Bill Act signed into law on July 4.¹
Trump made eliminating taxes on tips and overtime a cornerstone of his 2024 campaign after watching Biden's inflation disaster crush working families.
Now millions of Americans who put in extra hours or depend on tips will see real relief when they file their 2025 taxes in just a few weeks.
Workers who receive tips can deduct up to $25,000 from their taxable income.
The IRS estimates about 6 million workers report tipped wages and will be eligible for these deductions starting with the 2025 tax year through 2028.²
For overtime workers, the tax break is equally significant.
Employees can deduct up to $12,500 as single filers or $25,000 for joint filers from the "time-and-a-half" portion of their overtime pay.
That's money Biden's IRS was taking straight out of paychecks from people working 50 and 60-hour weeks just to keep up with his inflation.
The deductions phase out for taxpayers earning over $150,000 individually or $300,000 for couples filing jointly.³
Biden's Inflation Catastrophe Made These Tax Cuts Necessary
Biden's reckless spending triggered the worst inflation crisis in four decades.
Prices jumped 21.5% during Biden's presidency while real wages for private sector workers actually fell 4%.⁴
The average American family had to spend an additional $17,080 per year just to buy the same goods and services they purchased in January 2021.⁵
Gas prices shot up 31% under Biden.
Mortgage payments doubled from $1,300 to $2,600 monthly as interest rates skyrocketed.⁶
Working families got hammered from every direction while Biden claimed the economy was doing great.
Trump watched servers, bartenders, construction workers, and nurses getting crushed by Biden's inflation while paying massive taxes on their overtime and tips.
The President made a promise to end that robbery and he's delivering.
Treasury Secretary Scott Bessent said in April that "tariff income could be used for tax relief" on tips, overtime, and other worker-focused deductions "immediately."⁷
That's how you fund tax cuts for working Americans instead of endless government spending like Biden did.
IRS Makes Filing Easy Despite Democrats' Obstruction
The IRS guidance helps workers claim these deductions even though Forms W-2 and 1099 won't be updated to separately list tip and overtime income for 2025.⁸
That's because Biden's bureaucrats dragged their feet implementing Trump's tax cuts after Democrats voted against them.
The One Big Beautiful Bill passed Congress on a party-line vote in July after every single Democrat opposed giving working Americans tax relief.⁹
Workers may need to calculate their eligible deductions separately this year using guidance and examples the IRS provided.
The agency is updating income tax forms and instructions for the filing season that typically begins in late January.¹⁰
But make no mistake about who fought to give workers this break and who tried to stop it.
Trump and Republicans delivered tax relief while Democrats wanted to keep squeezing every last dollar out of people struggling under Biden's inflation.
Some employees are exempt from overtime rules, such as those earning salaries of at least $58,656 per year.¹¹
But for millions of hourly workers and those in service industries, Trump just handed them thousands of dollars Biden was confiscating.
The President kept his word to the American people who work the hardest and need relief the most.
¹ Eric Revell, "IRS guidance for Trump's 'no tax on tips' and overtime deductions: What to know," Fox Business, January 1, 2026.
² Ibid.
³ Ibid.
⁴ "Biden's Final Numbers," FactCheck.org, October 9, 2025.
⁵ "Biden's 20 Percent Inflation Tax Costs American Families Over $17,000 Per Year," House Budget Committee, June 28, 2024.
⁶ "FACT CHECK: Setting the Record Straight on Bidenomics," House Budget Committee, 2024.
⁷ "Treasury Secretary Scott Bessent says tariff income will bring income tax relief," The Center Square, April 29, 2025.
⁸ Eric Revell, "IRS guidance for Trump's 'no tax on tips' and overtime deductions: What to know," Fox Business, January 1, 2026.
⁹ Ibid.
¹⁰ Ibid.
¹¹ Ibid.
