Changes in Overtime Pay and Tips for Workers
COLOMBUS, Ohio – Many workers across the U.S. are reaping the rewards of a new budget bill under President Donald Trump, which is currently in effect, impacting taxes on tips and overtime regulations.
Kelley Metzger, a server with a decade of experience at the Nutcracker family restaurant in Patascala, began her journey when she was just a sophomore in high school. “I love working with people and learning stories about everyone,” she shared.
Metzger puts in great effort to collect the tips left behind and feels that not being taxed on these earnings will ultimately work to her advantage. “I think I’ll save more,” she said, expressing gratitude for the generosity of diners. “We’re thankful for what we get, so it’s nice to keep a bit more.”
Steve Butcher and his wife took over their family restaurant from his parents in 2019. Among their 40 employees, 15 are workers who have faced challenges in the past. “If you look at the cutting-edge workers, they really work hard and are, in reality, the lifeblood of our business,” Butcher remarked.
On Friday, Ohio Republican Senator Bernie Moreno visited the Nutcracker to discuss the implications of tips and the bill’s effect on overtime taxes with both workers and customers. “We have to talk about what this bill will do,” Moreno pointed out.
This new legislation encompasses both cash and credit card tips. Workers can deduct tips up to $25,000 if they earn less than $150,000 annually. However, this tax reduction is limited to federal income tax obligations, excluding state and local taxes. The provisions are set to be effective from 2025 to 2028.
Moreno emphasized that while this bill is a step forward, there’s still more work to be done for the workforce. “Working-class Americans have felt the impact for decades—especially the last four years with inflation affecting all prices,” he said.
The bill also introduces a framework that allows workers to amortize overtime pay of up to $12,500 annually. Interestingly, those earning over $150,000 a year will see a reduction in their deductible amount.
Some workers in Butcher’s restaurant will likely benefit from these changes. “We have many staff members who put in six days a week. They really work hard and devote a lot of time,” he noted.
Metzger mentioned that she typically works about 45 hours a week. With the new rules around overtime and tips, she’s starting to contemplate the potential benefits of double deductions. “Maybe you’ll buy a house or a new car,” she mused.
