Tax season is underway, and as South Dakotans file their taxes, they’re starting to see the impact of the Working Families Tax Cuts. They’re seeing smaller tax bills and bigger refunds, and that adds up to more money in their pockets. Most people will benefit from lower rates, a higher standard deduction, and an increased child tax credit, among other provisions, and there’s an additional boost for those who can now deduct tips and overtime pay on their taxes.
Roughly six million Americans claimed income from tips on their taxes last year. It’s fair to say that for many of these hardworking people, no tax on tips is a gamechanger. A lot of people who earn tips worry about what they will owe on their taxes every year. Many of them put money aside in case of a big tax bill – and that tax bill can be significant. But thanks to the Working Families Tax Cuts, those days are behind them. Now tipped workers can plan to save their money and put it toward their day-to-day expenses, planning for their future, or raising their families.
The Working Families Tax Cuts also created a new deduction for overtime pay, which can be a significant portion of a lot of Americans’ incomes. For police and other law enforcement officers, firefighters and paramedics, nurses and many other professions, overtime is a routine part of their job. But up until now, the impact of extra hours and wages was muted by federal taxes. Thanks to Republicans’ landmark bill, these hardworking Americans will now be able to keep more of the money they earn when they spend extra hours at work.
No tax on tips and overtime offers South Dakotans hundreds of dollars in tax savings, and that comes on top of other tax relief in the Working Families Tax Cuts. With this landmark bill, Republicans secured permanently lower tax rates, permanently raised the standard deduction, and increased the child tax credit to $2,200 and linked it to inflation so it keeps pace with the actual cost of raising a child. For seniors, there’s an additional $6,000 deduction to offer more breathing room for folks on a fixed income. Then there’s relief for small businesses, farms, and ranches that will help grow our economy and create good-paying jobs in South Dakota and across the country.
Republicans had working people in mind when we wrote this bill. For the last several years, the American people have suffered through an affordability crisis, and I know affordability is still an issue for a lot of people. Affordability starts when you have more money in your pocket, and thanks to the Working Families Tax Cuts, hardworking Americans are going to be able to keep more of their hard-earned money. I encourage you to learn more about the tax relief that’s available for you this tax season thanks to the Working Families Tax Cuts – it will make a big difference for so many folks across our state.