As members begin receiving their W-2s and preparing to file taxes, many are noticing something troubling: refunds are smaller than expected, tax relief feels underwhelming, and the promises made to working families simply don’t match reality.

When Congress passed the so-called “One Big Beautiful Bill,” working people were told it would deliver huge refunds, lower taxes, and meaningful relief. Instead, families are discovering that the law delivered permanent gains for corporations and the ultra-wealthy—and temporary, limited, or disappearing benefits for everyone else.

The fine print mattered. And it was written to favor shareholders and executives, not public servants, care workers, or retirees.

What Actually Happened Under the Trump Tax Cuts:

• Corporate tax rates were slashed from 35% → 21%.  Corporations saved billions. Workers saw little to none of that money in their paychecks.

• The wealthy received the vast majority of permanent tax cuts.  Cuts for working families were temporary and are now expiring.

• New "No Tax on Overtime" and "No Tax on Tips" provisions are limiting and expire in 2028. These working people tax breaks are only for the next few years and come with a lot of fine print that cuts refunds and limits access. 

• Childcare tax credits were not meaningfully expanded. This leaves working parents — especially child care educators and families who rely on them — struggling with rising costs.

• The federal government lost trillions in revenue. Which then served as the backdrop to devastating and unprecedented cuts to housing, SNAP, childcare, and public-sector jobs.

When the overtime deduction was debated, it was sold to working people as major tax relief. But when the details were finalized, it became clear that the policy was built with restrictions, exclusions, and caps that dramatically limit its impact, particularly for public-sector and lower-wage workers.

For workers who covered vacancies, worked extra shifts, or carried short-staffed agencies on their backs, this feels like the bait-and-switch it is. Below are a few important points about the tax code changes:

1. The Overtime Deduction Has a Hard Cap — And It’s Much Smaller Than People Realize

Under the federal policy passed in late 2025, single filers can deduct up to $12,500 and joint filers can deduct up to $25,000

But your W-2 will not show these caps. By IRS rule, your W-2 lists what could be deductible, even if your eligible amount is higher than the cap. You will only apply the cap when you file your federal tax return.

2. You Cannot Deduct Your Full Overtime Pay — Only a Small Portion of It

This is where many members will feel misled. The deduction only applies to the overtime premium, not the full overtime earnings. For many members, especially those who worked substantial overtime during staffing shortages, this distinction significantly reduces the real benefit.

The FLSA includes several adjustments that raise an employee’s overtime rate beyond time-and-a-half (e.g., for shift differentials).  None of these additional amounts are deductible. Only the portion above your standard hourly rate counts.

Example:
If your base rate is $40/hr, and you earn $60/hr for overtime, the deductible amount is only the extra $20, not the full $60.

3. Only Certain Kinds of Overtime Count — And Many Public Employees Won’t Qualify at All

The law only allows deductions for overtime mandated under the Fair Labor Standards Act (FLSA). That means if your contract provides overtime between 35 and 40 hours at time-and-a-half, none of that overtime is deductible. Many state and municipal employees fall into this category and will see no deduction, even if they worked large amounts of overtime.

The tax law didn’t just reshape refunds—it blew a massive hole in federal revenue, losing trillions of dollars over the decade. That loss quickly became the justification for devastating cuts to programs working families rely on every day. Families are now facing:

• Cuts to Medicaid, increasing out-of-pocket health care costs and threatening coverage for children, seniors, and people with disabilities

• Weakened Affordable Care Act subsidies, raising premiums and deductibles for middle-class families

• Deep reductions to SNAP, making it harder for families to put food on the table during a time of record grocery prices

• Cuts to housing, childcare, and public-sector jobs, directly impacting community stability and service quality

In other words, families are paying twice: once through an unfair tax system, and again through higher costs and fewer services.

Connecticut did not enact new tax increases on working families in 2024–2025. That matters. But the state also failed to take meaningful action to fix a tax system that remains upside-down—one where working families pay a higher share of their income in taxes than the wealthiest residents.

Washington broke its promises. Connecticut missed an opportunity to do better. And working families are left holding the bill. A bill that truly put working families first would look very different.

It would:

• Raise revenue from the ultra-wealthy and large corporations who benefited most from the last round of tax cuts

• Permanently expand child tax credits and childcare investments, lowering costs for families and strengthening the care workforce

• Protect and expand Medicaid, SNAP, and ACA subsidies, reducing health care and food costs—not increasing them

• Lift the SALT cap, ending double taxation on middle-class households

• Deeply invest in public services, from education and housing to healthcare and public safety

• Create stable, long-term tax relief for workers, not temporary provisions designed to expire

That would be a tax policy built around dignity, fairness, and shared prosperity—not trickle-down promises that never arrive.

We know many members feel overpromised and underdelivered. At the state level, we are pushing for tax and budget policies that actually work for working families. Through our partnership with Connecticut For All, we are building a campaign to flip our upside-down tax structure—so working families can afford to live, raise kids, retire, and thrive in Connecticut.