On Thursday, Republican presidential candidate Donald Trump announced that he will eliminate all taxes on overtime pay if he wins the election on November 5. Speaking at a rally in Tucson, Arizona, Trump promised, "As part of our additional tax cuts, we will end all taxes on overtime. Your overtime hours will be tax-free."

Trump, who is in a competitive race against Democratic Vice President Kamala Harris, has previously expressed intentions to seek legislation to end the taxation of tips to support service workers. Harris has made a similar commitment.

In response to Trump’s proposal, a spokesperson for the Harris campaign accused him of making desperate promises. “He is desperate and scrambling, saying whatever it takes to try to trick people into voting for him,” the spokesperson stated.

Earlier this month, at a campaign event with union workers, Harris criticized Trump for allegedly obstructing overtime benefits during his presidency from 2017 to 2021. In 2019, the Trump administration updated the eligibility criteria for overtime pay, extending it to 1.3 million more workers. This rule raised the salary threshold for overtime exemption to $35,568 annually, up from the previous $23,660. However, this adjustment was seen as less generous compared to the Obama administration's proposal, which aimed to raise the threshold to over $47,000 and cover nearly 5 million additional workers. That proposal was later invalidated by the courts.

Trump's new plan to eliminate taxes on overtime pay would primarily benefit blue-collar workers, including fast-food employees, nurses, and store assistants. “The people who work overtime are among the hardest-working citizens in our country, and for too long no one in Washington has been looking out for them,” Trump said.

Under current Labor Department regulations, eligible workers receive time-and-a-half pay for hours worked beyond 40 hours per week. Recent data from the Bureau of Labor Statistics indicates that factory workers in non-supervisory roles average 3.7 hours of overtime per week.

Eliminating taxes on overtime pay could reduce government revenue, particularly as Trump also plans to make his previous tax cuts permanent. According to the non-partisan Congressional Budget Office, this would increase the U.S. deficit by $3.5 trillion through 2033. The U.S. budget deficit has already reached $1.9 trillion in the first 11 months of the current fiscal year.

Trump's proposal would be a novel move at the federal level. Earlier this year, Alabama became the first state to temporarily exclude overtime wages from state taxes in a bid to address labor market shortages. This exemption, which received legislative backing, is set to last for 18 months.