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Wisconsin Watch partners with Gigafact to produce fact briefs — bite-sized fact checks of trending claims. Read our methodology to learn how we check claims.

No.

President Donald Trump’s recently enacted big bill removes the federal income tax on certain tips and overtime, but those tax deductions end in 2028 and have other limitations.

Under the new law, restaurant servers, barbers and other workers who typically work for tips can deduct up to $25,000 of tip income – meaning that amount isn’t taxable. 

For overtime pay, the tax deduction is up to $12,500.

Both deductions generally are for people who earn less than $150,000 annually.

Federal payroll taxes for Social Security and Medicare (FICA), and state and local taxes, still apply.

The tipped income provision would affect about 2% of households, and they would receive an average tax cut of $1,800 annually, the nonpartisan Tax Policy Center estimated.

About 8% of hourly workers and 4% of salaried workers regularly work overtime, according to the Yale Budget Lab.

The average annual savings for the overtime provision is $1,400, according to the White House.

This fact brief is responsive to conversations such as this one.

We’ve written more extensively about this topic in a different article. You can read more about it here.

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Tom Kertscher joined Wisconsin Watch as a full-time reporter in October 2024. He started as a fact checker in January 2023 and contributes to our collaboration with the The Gigafact Project to fight misinformation online. Kertscher is a former longtime newspaper reporter, including at the Milwaukee Journal Sentinel. He is a contributing writer for Milwaukee Magazine and sports freelancer for The Associated Press.