Working Class Bonus Tax Relief Act of 2025This bill allows a tax deduction for bonuses received by an individual, subject to income limitations, through 2029. The amount of the deduction may not exceed 15% of the individual’s regular wages from the same employer. Further, the deduction is not allowed for individuals with annual adjusted gross income exceeding $100,000 (or $150,000 for heads of the household and $200,000 for married couples filing a joint return).
If enacted, HB557 could significantly benefit lower and middle-income workers who receive bonuses from their employers. By allowing these individuals to offset their taxable income by a portion of their bonuses, the bill aims to enhance disposable income and stimulate economic activity. Furthermore, the bill stands to provide relief specifically to the working class, who are often the most affected by rising costs of living. However, the proposed income limits mean that higher earners would not benefit from this tax incentive, which may serve as a point of contention among various stakeholders.
House Bill 557, titled the 'Working Class Bonus Tax Relief Act of 2025', aims to amend the Internal Revenue Code to provide tax deductions for certain bonuses received by individuals. The proposed legislation allows taxpayers to deduct bonuses that do not exceed 15% of their non-bonus wages from the same employer within a taxable year. This deduction is limited to individuals whose adjusted gross income does not exceed specified thresholds, namely $200,000 for married couples filing jointly, $150,000 for heads of households, and $100,000 for other individuals. The bill also stipulates that no deductions will be permissible for amounts received after December 31, 2029.
Discussions surrounding HB557 may lead to differing opinions on its fairness and effectiveness. Proponents of the bill argue that it recognizes the contributions of workers and seeks to return value to individuals who may struggle with high tax burdens on bonuses they earn. Critics, on the other hand, may raise concerns about government intervention in tax policy and point out that the specific income caps could exclude many deserving workers, particularly in higher cost-of-living areas. This tension reflects broader debates on tax equity and the role of the government in supporting working-class families.