President Donald J. Trump. (Photo: Whitehouse.gov)
California Refusing Trump Tax Cuts on Tips and Overtime
It will be a 20% increase on small businesses
By Katy Grimes, December 29, 2025 1:00 pm
President Donald Trump’s One Big Beautiful Bill Act exempted federal taxes on tipped wages and overtime pay… except it won’t happen in California. It appears Governor Gavin Newsom isn’t interested in complying with the tax cuts for California’s hourly employees.
At the same time California is proposing to tax billionaires an additional 5% tax, the state’s Democrat Governor plans on denying hourly workers tax breaks on tips and overtime.
Tax refunds in 2026 are projected to be the largest ever, the White House recently reported: “Tax filers could expect an extra $1,000 bump to their tax refund next year, in what could be a record-breaking tax refund season. In total, the working families tax cuts will give American taxpayers $191 billion in net new tax relief… For the 2026 tax filing season, taxpayers are expected to take home an additional $91 billion in refunds and keep an additional $30 billion in their paychecks from reduced withholdings.”
But, as the New York Post reported, “Democratic strongholds like New York, Illinois and California have so far declined to extend state-level tax breaks, Reuters first reported, citing billions of dollars in potential budget shortfalls.
Other blue and red states alike have yet to signal whether they will take up legislation in the new year to conform to the federal tax code by changing the definition of what qualifies as taxable income. States like New Jersey are open to some of the provisions like not taxing tipped workers.”
Reuters reported that “California, With a projected $3.2 billion annual cost, California’s leadership signaled no intention to adopt the deductions, preferring to preserve funds for public programs.”
Making Trump’s 2017 tax cuts permanent protects the average taxpayer from a 22 percent tax hike. But it appears that California is taking a pass.
Because of grossly irresponsible spending and fraud resulting in California’s gigantic budget deficit, hourly workers won’t see the tax breaks.
It’s not as if there was much support anyway among Democrats in California for the tax breaks. As the Globe reported, California’s Democrat Members of Congress tried to unleash the largest tax increase in history by voting against making President Donald Trump’s 2017 tax cuts permanent in the “One Big Beautiful Bill,” also known as H.Con.Res.14:
“Every Congressional Democrat voted against the tax cuts.
Yet, as Economist Stephen Moore told the Globe, “If we don’t pass this bill, it will be the biggest tax increase in history.”
Moore, co-Founder of Unleash Prosperity Now, and the author of “Who’s the Fairest of Them All?: The Truth about Opportunity, Taxes, and Wealth in America,” warned in May that if Trump’s “One Big Beautiful Bill” is not passed, every family in America will pay $2,000 to $3,000 more per year in taxes – and that is just for starters.
It will be a 20% increase on small businesses. California Small businesses are already suffering and have been for many years under two very left-wing Democrat governors – former Governor Jerry Brown and Governor Gavin Newsom. Many businesses have fled California for low-tax, low regulatory states. Since 2020 over 500 companies have either left California completely, or built and expanded operations in a low-tax state, shrinking their California operations.
Without the bill passed, we will revert back to the old tax system – standard deductions will be cut and high taxes will once again plague the country.
Notably, in 2023, Moore reported, “We now have incontrovertible evidence that after five years since they took effect, the Trump tax rate cuts of 2017 raised revenues over this time period.”
“In other words, revenues were up 40% in five years. The evidence through the first three years of the tax cut finds that the share of taxes paid by the wealthiest 1% rose as well. So much for this being a tax giveaway for the rich.”
The U.S. House Ways and Means Committee explains that the tax cuts need to be extended to continue to “provide tax relief for families, workers, small businesses, manufacturers, and farmers. The One, Big, Beautiful Bill, makes the successful 2017 Trump tax cuts permanent, provides additional tax relief for working families and small businesses, rewards investment and manufacturing in America, and holds woke elites accountable while ending tax giveaways to the wealthy, China, and illegal immigrants.”
“Instead of a $1,700 tax hike, working families still recovering from Biden’s inflation crisis will now receive on average a $1,300 tax cut and workers will get $3,300 more in real income back into their pockets. Permanence of the 2017 Trump tax cuts will save 6 million jobs, including 1.1 million manufacturing jobs.”
Not in California.
The White House reported, in addition to finally exempting tips, overtime, and seniors’ Social Security from taxes, here’s what else that means:
- Real wages will go up by as much as $3,300/year.
- Take-home pay for median-income households will increase by as much as $5,000/year.
- Short-run real GDP will be boosted by 3.3-3.8% and long-run real GDP by 2.6-3.2%.
- 4.1 million jobs will be saved.
But not in California.
A California native and Navy mom, Katy lives in Sacramento, CA.
- Sable Pipeline Gets Go-Ahead to Restart California Pipeline - January 2, 2026
- More Prop. 50 Redistricting Contributions and Expenditures and $31M to Consultants - January 2, 2026
- President Trump’s 20 Point Plan To Make America Great Again is Flourishing - January 1, 2026
RELATED ARTICLES
-
February 15, 2019 -
March 26, 2023 -
July 23, 2024
Tip Cash!
Keep pounding Newsom on this and other pocketbook issues. Soon the Epstein delay tactic will run out of media steam, and the democrats are going to have to start using democratic governors as diversions (Wall then Newsom) to distract from what I believe are the ultimate big prizes. (Weaponized Government, Stolen Elections, Clinton’s & lastly Obama).
showing how much you really understand… it’s WALZ
no state is required to follow the federal tax deductions. there are already differences in possible deductions…ie California doesn’t tax social security benefits while the federal govt does.
the tip deduction and no tax on overtime is a poor policy used simply to buy votes… and are only good until 2028, the yrs of trump’s term. this will also cause the deficit to increase.
there are MANY hardworking people who don’t get tips and are in low paying jobs… why should a tip receiver get some sort of tax break that others don’t.
btw… how about pounding trump on the fact in 2024 California paid the federal govt $270+BILLION more in taxes than it received in federal spending and a more equitable balance should be struck. while the imbalance is not normally this great, it is typical that CA pays more than it receives. in 2023 it was $70+billion.
Red states on the other hand receive more than they pay… this includes TX & FL
Again, Newscum and the Democrat thug mafia will prove how much they care for the average Californian. There’s gotta be something done about him and the freakin thieves in this state capitol. Changing gears here. The progressive I know is in total denial about Trump and ANYTHING he does to try to improve the life of everyday Americans. To the point of open hostility if I keep talking. Pretty much ruins her night. LOL. Just want to say these people are SICK and they will never be sane again until Trump leaves office. But even then…It’s kinda sad to see someone with TDS, and I believe it’s going to get worse as time goes by. I’m just wondering what could be the spark that lights these people off and they become violent again. I’m saying this because I was reading the article to her and she lost it. LOL. I guess the best thing is to pray Trump does really good. The economy gets hot and just sit back and watch the melt down. Ok. Back to the article. Again, this clown of a governor is going to deny my / our tax break because he has TDS also. This man is lower than whale sh#t on the bottom of the ocean if he does this. He is anyway. I don’t know about anyone else but I’m freakin pissed. I guess now would be a good time to tell my co workers to get out and vote, and voting has consequences because my coworkers may be a little hot too when they hear this…Just don’t vote Democrat. Man, I can’t wait until this idiot is gone. I apologize, this is a little disjointed and I got a little off topic, but these people are sick individuals. Including our governor.
Yup… this is Newsom’s TDS on full display…
I’m no big fan of his personality either, but I like his POLICIES and I’m mature and well-adjusted enough to discern the difference…
no state is required to follow the federal tax deductions. there are already differences in possible deductions…ie California doesn’t tax social security benefits while the federal govt does.
the tip deduction and no tax on overtime is a poor policy used simply to buy votes… and are only good until 2028, the yrs of trump’s term. this will also cause the deficit to increase.
there are MANY hardworking people who don’t get tips and are in low paying jobs… why should a tip receiver get some sort of tax break that others don’t.
Trump doesn’t care about improving the life of everyday Americans. where did you get that? what he does do is buy votes… that is why these programs will only last until 2028 when his term ends.
these programs will also add to the deficit which in time makes things worse for average everyday Americans.
if trump really cared he would balance the budget instead of INCREASING AGAIN like he did each and every year in his first term. if trump really cared his policies would reduce tge wealth gap between high earners and low earners instead of increasing it.
he is NOT denying your tax break. you STILL have a federal break. you simply don’t get a break in your state taxes… but based on your writing i imagine your state tax break wouldn’t amount to much anyway
It’s all a big game. an illusion of good cop bad cop. It’s circular Kabuki theater and your paying for it.
Newsom and the democrats hate the people of California and they love and protect the cartels and illegal aliens. Flood Newsom with calls. Flood your state representative with calls. They work for us!
At this point, Newsom needs to be physically removed from office, tarred and feathered, (no joke here) and made an example of what happens when you betray Californians.
Newscum is wanting all Americans out of California so he can let China take it ! I can’t think of any other reason you would destroy your own state.
Fuck you Newscum!