Republicans are blasting leaders in four Democrat-led states for continuing to tax tips and overtime pay, even as President Donald Trump pushes a federal policy to eliminate those taxes and boost take-home pay.
The clash centers on policies tied to Trump’s sweeping “One Big Beautiful Bill Act,” which includes provisions to remove federal taxes on tips and overtime income.
But states including Kathy Hochul’s New York, Gavin Newsom’s California, JB Pritzker’s Illinois, and Jared Polis’s Colorado have not aligned their tax codes with that approach.
That disconnect is now fueling a broader affordability debate.
“Gov. Hochul and Albany Democrats believe your money is their money: They are picking the pockets of waitresses, bartenders, and first responders who work overtime just to make ends meet,” Rep. Mike Lawler told Fox News Digital. “No wonder working people and jobs continue to flee New York in record numbers.”
Republicans argue that failing to exempt tips and overtime from state taxes undercuts the intended relief of the federal policy, particularly for service workers and first responders.
In California, Rep. David Valadao said state leaders missed an opportunity to lower costs.
“California Democrats talk a lot about making life more affordable, but when given the chance to let hardworking Californians keep more of what they earn, Gov. Newsom and the state legislature refused to update the state’s tax code,” he said.
Illinois Republicans are making a similar case against Pritzker, with state party chair Kathy Salvi accusing the governor of opposing Trump-backed tax relief while eyeing a potential national run.
“The sad truth is that if President Trump is for it, JB Pritzker will always be against it,” Salvi said.
Colorado has drawn separate scrutiny over how it handles federal deductions. GOP Rep. Gabe Evans said the state’s requirement that certain federal tax benefits be added back for state taxes effectively negates overtime relief.
“But while we fought to give Coloradans relief, Gov. Polis and state Democrats held a special session to re-tax overtime pay,” Evans said.
Democrats have not broadly embraced the GOP framing, and state tax systems often operate independently of federal changes, meaning adjustments to align with federal policy can require legislative action at the state level.
Still, Republicans are leaning into the issue ahead of key elections, arguing that the contrast highlights competing economic visions on taxes and affordability.
With several of the governors mentioned facing re-election bids or national speculation, the fight over tips and overtime is quickly becoming more than a policy dispute—it’s shaping up as a campaign issue.
