What Canada can learn from USA’s ‘no tax on overtime’

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OP-ED: Work Hard, Keep More, What Canada Can Learn from America’s Overtime Tax Break

While Ottawa punishes productivity with taxes and red tape, Washington is finally rewarding the working class. It’s time Canada followed suit.
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Something striking has happened south of the border. The United States — yes, the same country that just raised its debt ceiling again to fund more bloated programs and foreign escapades has actually managed to include a good idea in its latest megabill. Say what you will about the One Big Beautiful Bill Act, and to be clear, we do not approve of mortgaging the future with more reckless federal spending. But credit where it is due this bill includes one of the smartest, most grounded policies we’ve seen from Washington in years.

It rewards people who want to work.

Specifically, it eliminates federal income taxes on overtime pay for qualified workers. That means up to $12,500 per year for individuals, or $25,000 for married couples filing jointly, is completely shielded from federal tax if it comes from overtime. In other words, the more you work, the more you get to keep.

To qualify workers must be non-exempt under the Fair Labour Standards Act. That means they are paid hourly or earn below government fixed thresholds. The overtime pay must exceed the normal wage rate and it must be properly reported on tax documents.

The deduction phases out for those with modified adjusted gross income above $150,000 for single filers or $300,000 for joint filers It covers only federal income tax. Payroll taxes such as Social Security and Medicare still apply and states may tax this income .
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This is what real economic policy looks like. And it exposes just how out-of-touch our own leadership in Canada has become.

Let’s be honest. In this country, we punish productivity. Ottawa’s approach under Mark Carney Trudeau’s former economic advisor and an unelected disciple of the global financial elite has been to tax, regulate, and redistribute. The result? Middle-class Canadians are squeezed, businesses are shuttered, and tradesmen are treated like second-class citizens while bureaucrats and foreign consultants cash in.

The Americans just sent a different message. They said if you’re an hourly worker, you matter. If you put in extra time, you should not be penalized for it. Their law targets real working people, not civil servants, not Bay Street executives, not World Economic Forum alumni, but the people who fix the roads, install the power lines, keep the hospitals clean, and actually build the country.

And here’s something Ottawa doesn’t want to talk about Canada is falling behind in productivity. Badly. While the political class is busy virtue-signaling about climate targets and crafting ever-expanding welfare programs, the economic fundamentals are rotting beneath them.

As of 2023, Canadian workers generated only 74.70 US dollars of output per hour (adjusted for purchasing power). Compare that to the United States at 97.00 and France at 89.30. Yes, that’s right France, a country known for three-hour lunches and 35-hour workweeks, is outproducing us.

Let that sink in.

From 2000 to 2023, Canada’s productivity grew at just 0.8 percent annually. That’s a snail’s pace. It’s well below the United States and most of our OECD peers. And the trend is getting worse, not better.

Canada’s productivity index relative to the U.S. was only 78.5 in 2022 significantly below our historical average of about 82 to 85. We used to be in the same league. Now we’re falling into the second tier.

Why? Because we punish work and reward stagnation. We tax our businesses more, burden them with regulation, and spend our national energy debating pronouns instead of pipelines. Meanwhile, the Americans just passed a law saying, “Work harder, keep more of what you earn.” That’s the difference.
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No tax on overtime and no tax on tips are going to keep the USA out of recession.
 
Upvote 19
We have no productivity because we're a loser country with loser people that only care about their government handouts. We have no innovation. We had 1 proper IPO in a year and it wasn't that proper just some Quebec clothing retailer. No venture capital. No investment other than muh housing bubble.

Unfortunately over half the country is just loser people and that makes us a country with a majority of losers.
 
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Between needing approval from the city, regional district, the province, the feds plus having to get approval (amd paying bribes) from the Injuns it is a pain to get anything approved, especially in the natural resources. Canada is not a good place to do business. Plus throw in the high taxes.....
 
220 hrs ot for me so far and more on the way thanks to the DEI hires. I get it paid out in small chunks at a time, why?

if i took out all that ot as giant payout then the government gets more of my money then i want them to get.

I want to take time off but the DEI hires make that impossible

I would love no tax on OT
 
I was getting my haircut yesterday and was talking to the stylist. I mentioned I'd like to see that in Canada no tax on tips and no tax on overtime. The funny thing is she mentioned at the salon we don't actually report our tips.

So I think a lot of people already doing this in a way. So I tipped her 20 in cash.

I fucking hate tipping but when I do it I do it well if the person is good.

I also don't think the bill means no tax on tips or overtime it just means up to a certain amount you'd pay no tax. I may be wrong on this one I can't check AI as I'm on my back deck.
 
Sure — here’s a plain text version you can copy and paste:



Trump’s “no tax on tips” and “no tax on overtime” policies both come with specific limits and income phase-outs:


1. No Tax on Tips


  • Up to $25,000 per year in reported cash tips can be deducted from federal taxable income.
  • Phases out for taxpayers with modified adjusted gross income (MAGI) above:
    • $150,000 (single filers)
    • $300,000 (married filing jointly)
  • Applies only to customarily tipped occupations.
  • This is an income tax deduction only — FICA (Social Security/Medicare) taxes still apply.

2. No Tax on Overtime


  • Up to $12,500 per year deductible for single filers.
  • Up to $25,000 per year deductible for married couples filing jointly.
  • Same income phase-outs as above: MAGI over $150,000 (single) or $300,000 (joint).
  • Applies only to qualified overtime pay (hours worked beyond standard FLSA thresholds).
  • Requires separate reporting of overtime income.

Additional Notes


  • These deductions are available even if you take the standard deduction.
  • They apply to tax years 2025 through 2028.
  • Workers must properly report tips and overtime income to qualify.

Summary Table:


TypeAnnual LimitPhase-Out Starts At
Tips$25,000$150,000 (single) / $300,000 (joint)
Overtime$12,500 (single) / $25,000 (joint)Same as above


Let me know if you want this formatted differently or added to a doc.
 
The issue isn't "tax on overtime", the issue is progressive income taxes or rather income taxes altogether along with government regulations on working. Overtime actually shouldn't exist at all.

  • Abolish income tax.
  • Abolish the concept of overtime.

Let employers and employees determine how they want to go about things.

It's honestly that simple. The government fucks things up with their tax codes and labor laws.
 
I had a 25 year run of working overtime. A good portion of that time I took as much as I could get. Someone I worked with figured it out that, at a certain amount of overtime, we were working for 1/4 of what we were making. I can't recall how many hours of OT that was but, I do know that after 18 hours, or so, we went into a different tax bracket. So, when I eventually got tired of working that much, and paying that much tax, I would refuse OT after 10-12 hours.

It would have been awesome if that were tax free.
 
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