Evers vetoes bills to exempt overtime, cash tips from income tax

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(The Center Square) – Wisconsin Gov. Tony Evers vetoed a pair of bills Friday that would have exempted overtime pay and cash tips from state income taxes.

Assembly Bill 461 would have matched a temporary federal income tax exemption on overtime that would apply to the extra pay received for working overtime up to $12,500 per year for an individual or $25,000 per year for joint filers.

The exemption is targeted at middle-income residents and is phased out for those making an adjusted gross income between $150,000 and $275,000 as an individual or $300,000 to $550,000 as a joint filer.

“My position has always been that when we provide tax relief, it should be real, responsible, and targeted to the middle class and working families who need it,” Evers said in his veto message. “Unfortunately, I must veto this bill in its entirety because I object to this bill changing the tax code in a way that will treat Wisconsin workers who earn similar wages differently just because of their classification as salaried or hourly workers.

“A salaried worker who earns $35,000 (and is not eligible to earn overtime compensation) should not pay a different amount in taxes from an hourly worker who earns $35,000 through working overtime. We should focus on creating a fairer tax code that provides real, responsible tax relief that supports rather than divides working Wisconsinites.”

Senate Bill 36 would similarly had created an exemption for up to $25,000 in cash tips from state income tax.

“I am vetoing this bill because I object to the Legislature effectively ceding control over the direction of state tax policy to Congress by connecting the proposed state tax deduction for tips to any change in the federal deduction, regardless of what is best for Wisconsin,” Evers wrote in his veto message. “We should not be at the whims of a Republican-controlled Congress that has no problem gutting basic necessities and services like food and access to healthcare just to pay for tax cuts for millionaires and billionaires.

“Wisconsin should retain control over the parameters of a potential income tax deduction for tips so we can modify the policy based on what makes the most sense for Wisconsinites.”

Congressman Tom Tiffany, R-7th Congressional, is a candidate for governor and said on Friday that he would have signed both bills into law.

“If you pick up extra shifts, work overtime, or rely on tips to make ends meet, Democrats in Madison think they should get a cut of your paycheck,” Tiffany said in a statement. “They claim to stand with workers, but when it matters most, they vote to take more of your money.”