Income Tax and Overtime

On July 4th, President Pennie forwarded an email message from Anita Tanay (the official ATU Local 308 lawyer) explaining how we can use the new overtime income tax deduction: 

"Hi all. The “Big Beautiful Bill” That was passed today includes a provision that eliminates federal income taxes on certain overtime pay. The way it will work is that individuals earning less than $150,000 per year can deduct up to $12,500 of overtime pay from their taxable income ($25,000 if they file jointly).  It is effective for this tax year through 2028.  Please note that CTA will continue to deduct taxes from overtime like all other pay—but when the time comes to file your tax return, you’ll be able to claim the overtime deduction if you’re under the earning ceiling."

It was so nice of her to work on a holiday for that measly $200,000 salary we pay her. However, she is partially incorrect by implying that you need to earn less than $150,000. 

According to SEC 225(b)(2)(a), you can still claim deductions if you make more than $150,000. However, it will be reduced by $100 for every $1,000 over the $150,000 limit (see screenshot at right).

Read more about this at USA Today. To read the entire contents of this part of the bill, see Section 70202 "NO TAX ON OVERTIME" at Congress.org. 

In my opinion, this historical deduction a good thing for us (yes, regardless of my disliking him, I am giving credit to the President Trump for doing something good). However, the downside is that it perpetuates the unsustainable trajectory of hiring less workers—and making less of us do more work. 

Despite the sensational news reports, overtime costs less than hiring new workers. However, human resources consultants such as Atlas Precision Consulting know that those true cost savings are NOT substantial. They break it down succinctly in these charts:

We don't need more overtime. These 7-day workweeks and double shifts are killing us. We need higher wages and more Full-Time Permanent jobs. Pensioners need a RAISE now! The CTA needs to quit being the Cheap Transit Authority and start being a real Chicago Transit Authority!