These States Are ROBBING Blue Collar Workers! I’m Putting Them On BLAST!
I’m JV Charles, founder and senior editor at JV CHARLES TV. After more than 30 years on the tools union carpenter, project manager, UAW inspector I’ve watched guys grind 50- and 60-hour weeks only to watch a chunk of those hardest hours disappear into state coffers. The federal government finally gave tradespeople a break with the no-tax-on-overtime provision. Then California, New York, Illinois, and Colorado said, “Not so fast.” Same trade, same overtime, completely different take-home. That is the story we’re putting on blast today.
Key Takeaways
- The One Big Beautiful Bill Act (signed July 4, 2025) lets W-2 workers deduct overtime premium pay federally up to $12,500 single / $25,000 joint for tax years 2025–2028.
- California, New York, Illinois, and Colorado refused to conform, so state (and sometimes city) tax still hits every overtime dollar.
- A typical tradesman working 10 hours of OT a week at $40/hour loses roughly $500–$1,000+ per year in those four states money that stays in the pocket in Texas, Florida, Tennessee, and other zero-income-tax states.
- Over 20 years the gap between a California electrician and a Texas electrician on overtime taxes alone can exceed $40,000 before you even factor in higher cost of living or licensing headaches.
- Highest paying skilled trades such as elevators, line work, and specialized HVAC or plumbing still deliver six figures zero debt paths when you pick the right state and path.
What the Federal Break Actually Does
Congress created a deduction for the overtime premium the extra half of time-and-a-half. Cap is $12,500 for single filers and $25,000 for joint, with phase-outs starting at $150,000 / $300,000 MAGI. It applies only to the premium portion and only for 2025–2028. For a guy making $40 an hour and pulling 10 OT hours a week, that premium runs about $10,000 a year. At a 22% federal bracket that is roughly $2,200 back in your pocket. Real money for blue collar families who already sacrifice nights and weekends.
States control their own tax base. Four of them looked at the federal relief and decided they still wanted their cut.
State #1: California
Highest combined rates in the country, climbing to 13.3%. A tradesman around $75,000 sits in the 9.3% bracket. California did not conform. Every overtime dollar is still fully taxed at the state level. Ten hours of OT a week at $40/hour costs you about $930 a year in state tax alone. Do that for 20 years and the state has taken more than $18,000 just on the premium before compound growth or the higher housing and tool costs that come with the territory.
Meanwhile the same plumber or electrician in Texas keeps the federal deduction and pays zero state income tax. Same skill set. Different zip code. Different net worth.
State #2: New York
Nine brackets from 4% to 10.9%. Add New York City’s local tax (another 3–3.9%) and you are looking at nearly 10% or more on the overtime. New York ranks dead last 50th on the Tax Foundation’s State Tax Competitiveness Index. On that same $10,000 premium a city tradesman is losing roughly $1,000 a year. The governor has spoken favorably about no tax on tips. Overtime for the ironworker or HVAC tech apparently does not qualify for the same consideration.
State #3: Illinois
Flat 4.95% rate. Sounds simpler until you realize the state refused to conform. That $10,000 premium costs you about $495 every year. Illinois has strong union scales that push plumbers pay and electrician wages into the high range—median electrician around $99,560 and plumber near $100,000 in recent BLS data but the state still takes its slice of the overtime.
State #4: Colorado
They actively decoupled in a special session, citing budget savings of about $119 million. Those “savings” come straight out of the pockets of the people working the extra hours. Colorado’s progressive structure means the more OT you pull, the more the state collects.
The States Where Your Overtime Actually Stays Yours
Zero state income tax states Texas, Florida, Tennessee, Nevada, Wyoming, South Dakota, Alaska, Washington, New Hampshire let you keep the full federal deduction with nothing extra taken at the state level. Several other states have either conformed or kept rates low enough that the hit is minor. Demand for skilled trades remains strong in these places. Data centers, infrastructure, residential growth, and manufacturing resurgence are driving openings for electricians, plumbers, HVAC techs, welders, and line workers.
The 20-Year Math Is Brutal
Take two electricians both earning the same base and both working the same 10 hours of OT a week. One lives in California. One lives in Texas. Over 20 years the California worker has paid tens of thousands more in state tax on the overtime alone. Factor in higher housing, higher tool costs, higher licensing friction, and the gap widens further. That is money that could have gone into a house, a truck, a retirement account, or simply breathing room for the family.
Highest paying skilled trades still reward people who stay in the game. Elevator installers and repairers routinely clear six figures. Power-line workers, specialized industrial electricians, and master plumbers running their own crews do the same. The difference is how much of that money you actually keep after the state is done with it.
Three Things You Can Do Right Now
- Maximize the federal deduction: Document every overtime hour carefully. Use Schedule 1-A and keep clean records. The $12,500 cap is real money if you claim it.
- Specialize so overtime becomes optional: Get the extra certs that push your rate into the $50–$65+ range. When you can clear solid money in 40 hours, the OT tax debate matters less.
- Look hard at location: If you are early in your career or mobile, states with high demand and low (or zero) income tax reward the same skill set far more. Apprenticeships and free or low-cost training programs exist in every state use the 2026 Blue Collar Resource Guide linked on the channel for the full map of union openings, grants, and training paths.
Why This Matters for Trades Careers and Six Figures Zero Debt
Skilled trades remain one of the clearest routes to solid middle-class (and often upper-middle-class) income without the four-year debt load. National medians for electricians, plumbers, and HVAC techs sit in the low-to-mid $60k range, with top earners and specialists well into six figures. Union scales in places like Illinois and the Pacific Northwest push even higher. The catch has always been taxes, cost of living, and licensing. When a state decides to tax the overtime that keeps the lights on and the family fed, it is not abstract policy. It is a direct reduction in what a working man or woman can build.
I have lived the early mornings, the weather, the tool bills, and the long weeks. The federal government finally acknowledged that the extra hours deserve relief. Four states decided otherwise. That is why I am putting them on blast. Know the numbers. Protect your paycheck. Choose the path and the place that lets the work pay what it should.
Frequently Asked Questions
Which states blocked the federal overtime deduction?
California, New York, Illinois, Colorado (plus Maine and D.C. in some reports). These states did not conform, so overtime remains fully taxable at the state level.
How much does the federal deduction actually save?
Up to $12,500 single / $25,000 joint of the overtime premium can be deducted. At a 22% bracket that is roughly $2,200–$5,500 in federal tax savings depending on how much OT you work, subject to the phase-outs.
Is it worth moving just for the tax difference?
For some people yes, especially early or mid-career. The combination of zero state income tax plus strong demand in Texas, Florida, Tennessee, and similar states can add up fast. Housing costs and family situation still matter run the full numbers for your situation.
What are currently the highest-paying skilled trades?
Elevator installers/repairers, electrical power-line workers, specialized industrial electricians, master plumbers/pipefitters, and certain nuclear or industrial roles consistently top the lists. Many clear six figures with experience and the right location, all reachable through apprenticeships with little or no student debt.
Where can I find free or low-cost training and union openings?
Every state has registered apprenticeship programs, community college pathways, and various grants. The free 2026 Blue Collar Resource Guide on the JV CHARLES TV channel covers all 50 states with links to union halls, free training, and startup resources.
References
- U.S. Bureau of Labor Statistics, Occupational Employment and Wage Statistics (May 2025 data release, used for 2026 salary comparisons)
- Tax Foundation State Tax Competitiveness Index and 2026 state tax data
- One Big Beautiful Bill Act provisions on overtime deduction (tax years 2025–2028)
- State tax conformity decisions reported for California, New York, Illinois, and Colorado
- Industry demand projections for electricians, plumbers, HVAC technicians, and related trades through 2034
