A campaign promise from President Donald Trump was to nix tax on tips and overtime hours, and as Tax Day comes to an end, Virginians are taking advantage of the new benefit.
“We’ve seen the average refund size at the federal level increase to about $350, about 11%, through March,” Virginia’s Secretary of Finance Mark Sickles said at a Senate Finance Committee meeting Tuesday.
That’s likely due to changes under President Trump’s One Big Beautiful Bill which created a $25,000 max deduction for tipped and overtime income.
Richmond area industrial machinist Riker Long makes about $100,000 a year in regular pay but even more with overtime.
“Overtime is built into my schedule and there’s certain times of the year where everyone has to work overtime, it’s just part of our job,” Long told Radio IQ.
He believes he got about $3,000 more in his federal refund this year thanks to the end of taxes on overtime.
Curtis Grimstead is an enrolled agent with Grimstead Accounting in Richmond. He’s had many clients take advantage of the new benefit, including some you may not think of.
“People who work at hair salons or barbers, they’re getting a significant amount of tips as part of their pay, even more than the average restaurant worker," Grimstead said in an interview Tuesday. "I’ve seen people in that industry maxing out on what they can deduct as the tips.”
He said that can lead to an increase of between $3,000 and $5,000 dollars on this year’s refund. And it's easy to get; a new form, Schedule 1A, records the taxed and overtime income.
"It's very standard, you don't need someone like me to do this," he said, noting any consumer tax prepping software has been updated to catch the change.
"But overtime requirements were not put in effect for W2s," he warned. "So, you need to get the amount of overtime worked from your employer."
Long said his company sent out instructions at the start of the year to help them get the new benefit but he had to get the amount of overtime from his paystubs.
The benefit does not apply to Virginia tax returns, however.
Then-Governor Glenn Youngkin pitched the idea in 2024 at the cost of about $70 million to state coffers. Democrats in both chambers rejected it then, and he left it off his outgoing budget a few months back; it was among a few Trump-backed federal changes states had the option to include but Youngkin did not.
Caroline County Republican Senator Richard Stuart, along with his Republican colleagues in the minority, supported extending 'no tax on tips' to Virginia's taxpayers in the new budget, but other financial hits to the state from Trump's One Big Beautiful Bill made it a non-starter for Democrats.
Still, Stuart is happy to hear Virginias benefiting from the federal tax break.
"The more money people can get in their pockets, the better they feel, the better the economy is," he told Radio IQ Tuesday. "It's just good all the way around."
And while Long is happy about the bigger refund he’s getting, he doesn’t expect it to go far because of other Trump administration policies.
“I’m going to be giving most of this money back over the course of the year through tariffs and the increased cost of gasoline," he told Radio IQ. "Which are like 100% the fault of Donald Trump and the Republicans."
