Trump’s budget rips nearly $3 billion from swing state’s coffers

U.S. President Donald Trump gestures during a visit to Verst Logistics in Hebron, Kentucky, U.S., March 11, 2026. REUTERS Kevin Lamarque

President Donald Trump’s “no tax on tips” part of his Big Beautiful Bill was one of the few bright spots garnering popular support of the legislation last year. However, analysts say one of the few progressive bright spots of the controversial bill has a dark side that will whack big dollars from some state budgets. One in particular: a state that went Trump in 2024, according to the Milwaukee Journal Sentinel.

Eliminating Wisconsin's taxes on tips and overtime would reduce state income tax collections by about $2.7 billion over the next decade when paired with the corresponding policy Trump enacted at the federal level.

A new report from Forward Analytics, the nonpartisan research arm of the Wisconsin Counties Association, finds the benefit to individual taxpayers would vary based on job classification and the makeup of their income. And researchers called for elected officials to provide a clearer picture of potential long-term consequences.

A “no tax on tips and overtime” policy allows eligible taxpayers to deduct tipped and overtime income from their income taxes — which would not typically change a worker’s weekly paycheck right away. Instead tipped workers would see the new tax policy at annual state tax filings, which would allow them subtraction tips.

However, “given historical growth rates in employment and wages, combined with estimated attrition and deduction amounts, Wisconsin could lose as much as $2.76 billion in income taxes between 2028 and 2037 should the state pass legislation similar to federal law,” analysts revealed.

The reality serves up some conflicting support as Trump heads to the campaign trail to try to sell voters on one of the few redemptive aspects of his signature tax cuts to middle-income workers. Trump hopes the popular “no tax on tips” policy can blunt growing dissatisfaction with the economy that Republicans fear could cost them their House majority. And the Trump administration has withheld the release of an annual IRS report showing how Republicans’ 2025 tax cuts affected millions of Americans’ taxes.

But recent polls show voters hammering the president’s economy, and they’re skeptical of the GOP’s “One Big Beautiful Bill,” that put Trump’s campaign promises into law last year.

Legislators and Wisconsin’s governor appear to be well aware of the upcoming hit to the state budget, reports the Milwaukee Journal Sentinel. Democratic Gov. Tony Evers in April vetoed bills that would have exempted Wisconsinites from paying state income taxes on tips and some overtime pay, arguing the measures failed to provide permanent relief while tying the state’s budget inextricably to Trump’s whim.

But the back and forth between GOP members of the legislature and the governor can get confusing. Republicans largely supported the bill Evers vetoed, but cut Evers’ own measure to eliminate the state income tax on cash tips in his 2025-27 state budget proposal in committee.

The Forward Analytics report notes its own discrepancy in tipped savings, using an example of a waiter and an administrative assistant who each make $40,000 per year. The waiter in that scenario, who splits his income between $25,000 in wages and $15,000 in tips, would pay $716 less in taxes per year than the administrative assistant earning the full amount in wages, the report notes.

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