It is a rare day when President Donald Trump and congressional Democrats agree on a big issue. But that is exactly what is quietly happening now.
A handful of Democrats recently introduced legislation that would build on some of the tax breaks that Trump and Republicans passed into law in July as part of the One Big Beautiful Bill Act.
Here is a look at some of these bills that Democrats in Congress have proposed.
1. The tax deduction for tips
The One Big Beautiful Bill Act allows eligible workers to deduct from their income up to $25,000 per year in tip earnings. This deduction is temporary, available only for the 2025-2028 tax years.
As it stands now, tips must be “voluntary” to qualify for the deduction. But at least one Democrat wants to change that.
In September, Sen. Ruben Gallego (D-Ariz.) introduced the No Tax on Large Party Tips Act. Gallego says his bill would clarify that taxes would not be assessed on “auto-gratuities and recommended tips, such as those added by restaurants when serving large parties.”
In an announcement, Gallego also says:
“The Republicans’ tax bill offers little relief to working Americans, and what relief it does offer – like no tax on tips – is shamefully short term. While no tax on tips expires in 2028, tax cuts for billionaires have no sunset. We must ensure that, while they last, as many workers as possible can [benefit] as much as possible.”
2. The tax deduction for overtime pay
The One Big Beautiful Bill Act changed tax law to allow workers to deduct up to $12,500 per year — or $25,000 for married couples filing jointly — in qualified overtime pay.
Now, Democrats as well as Republicans have introduced the No Tax on Overtime for All Workers Act. The legislation would expand the overtime pay tax break to some workers who currently are not eligible for it.
As things stand now, the One Big Beautiful Bill Act defines “qualified overtime pay” as required under the Fair Labor Standards Act. However, that federal law does not cover all workers.
An announcement issued by the office of Rep. Emilia Sykes (D-Ohio) — one of the co-sponsors of the No Tax on Overtime for All Workers Act — says the new act would broaden the definition of qualified overtime compensation “to include overtime work done by workers who are covered under the Railroad Labor Act and includes overtime as it is defined by collective bargaining agreements.”
3. The tax deduction for seniors
One of the most publicized aspects of the One Big Beautiful Bill Act was the new income tax deduction it created for many people who are 65 and older.
Thanks to the act, such taxpayers can now deduct up to an extra $6,000 from their income. This is in addition to other tax breaks that were in place prior to the act’s passage, such as the standard deduction and the enhanced standard deduction for seniors.
However, Gallego wants to create another tax break for older Americans. In September, he introduced legislation — the You Earned It, You Keep It Act — that would exclude all Social Security benefits from federal taxation.
We provide more details about Gallego’s plan in “Bill Would Make All Social Security Benefits Tax-Free Starting in 2026.”
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