Four states, led by Democrats, have been criticized by Republicans for not following President Donald Trump’s policy on taxing tips and overtime. Specifically, California, New York, and Illinois continue taxing these earnings, defying Trump’s One Big Beautiful Bill Act. In a somewhat different approach, Colorado is set to require taxpayers to report federally deducted amounts for future state tax calculations.
Rep. Mike Lawler of New York stated that Democratic leaders are misappropriating funds that rightfully belong to workers, such as waitstaff and emergency responders, who are struggling in a state with high taxes. He pointed out that New York consistently sees population decline, attributing it in part to the financial burdens placed on residents.
The Treasury Department recently noted that average tax refunds during the filing season can reach about $3,700.
As discussions around affordability heat up, Republicans are using Tax Day to critique governors in these blue states, especially as Hochul gears up for re-election and Newsom’s term comes to an end this year. California Republican Rep. David Valadao remarked that while Democrats claim to focus on affordability, they fail to update the tax code to allow hardworking Californians to keep more of their earnings, which appears as a betrayal to those who would benefit from reduced taxes on tips and overtime pay.
In Illinois, Kathy Salvi, the Republican Party Chairwoman, argued that Governor J.B. Pritzker, who is also seeking re-election, is preoccupied with undermining Trump rather than enhancing economic opportunities for residents. She criticized Pritzker for not capitalizing on the tax cuts implemented by Trump that could benefit many in the state.
Colorado’s Governor Jared Polis has also come under fire from Republican Rep. Gabe Evans, who highlighted the importance of overtime pay for many workers. He criticized Polis and the state Democrats for attempting to reintroduce taxation on overtime earnings, suggesting it deprives families of deserved benefits.
Attempts to reach the offices of Hochul, Newsom, Pritzker, and Polis for their responses went unanswered.
While these states are likely to maintain their Democratic gubernatorial leadership due to strong voter registration, the ongoing discourse relates back to Trump’s tax exemption policies affecting tipping and overtime pay. Data from the Senate Finance Committee indicated the fiscal gains from Trump’s policy are felt across all 50 states, despite the opposition from Democratic leaders. For instance:
- California: Over 3.1 million small business owners and 15.3 million families have benefitted.
- New York: More than 1.5 million small businesses and nearly 8.6 million families.
- Illinois: Over 1 million small businesses and around 5.5 million households.
- Colorado: Approximately 600,000 small businesses and about 2.6 million households.
