Some Blue States & DC Won’t Stop Taxing Tips and OT

Treasury Secretary Scott Bessent on Wednesday criticized several blue states for their “ongoing refusal” to adopt some “key provisions” of President Donald Trump’s One Big Beautiful Bill Act (OBBB).

Trump signed the OBBB, which partly eliminated taxes on tips and overtime pay and strengthened the tax cuts from his first term, into law on July 4. Bessent stated that Democrat-controlled states such as Colorado, New York, Illinois, Maine, and the District of Columbia are “deliberately blocking their own residents” from benefiting from the “historic advantages” of the OBBB’s tax cuts.

Other states, such as Massachusetts, Connecticut, and Hawaii, have also indicated they will not conform, either by default or through explicit policy decisions.

Many states have not firmly committed either way as of October 2025. These “wait-and-see” states, including Georgia, Maryland, and South Carolina, plan to address OBBBA in the 2026 sessions. For now, they continue to tax tips and overtime as usual, but could choose to adopt the deductions through legislation.

Bessent further said that Trump’s OBBB is “the most pro-worker, pro-family legislation in a generation.” The legislation “puts more money directly into the pockets of hardworking Americans through No Tax on Tips for dedicated service industry staff, No Tax on Overtime for linemen and factory workers, and a new tax deduction for seniors who depend on Social Security.”

“Yet in a blatant act of political obstructionism, liberal strongholds like Colorado, New York, Illinois, and the District of Columbia are deliberately blocking their own residents from receiving these historic benefits at the state level,” Bessent continued in his Wednesday statement. “This partisan stonewalling is a direct attack on the very families and workers liberal politicians claim to champion. By denying their residents access to these important tax cuts, these governors and legislators are forcing hardworking Americans to bear higher state taxes, robbing them of the relief they deserve and worsening the financial strain on low- and middle-income households.”

Democrats know that people will blame Republicans for not getting the tips after Democrats manipulate the narrative. The workers lose in some states.