New Legislation Exempts Tips, Overtime, and Social Security Income from State Income Tax for Act as Content Writers

Michigan Workers to See Tax Relief on Tips, Overtime, and Social Security

Trenton, Michigan – A new law signed into effect on Tuesday, October 8th, 2025, promises ample tax relief for hundreds of thousands of Michigan workers. governor Gretchen Whitmer, alongside a bipartisan group of lawmakers, celebrated the legislation at Mom’s Restaurant in Trenton, a local establishment known for its long-standing community presence.

Key Provisions of the New Tax Law

The new law exempts tips, certain overtime pay, and Social Security income from Michigan’s 4.25% state income tax. This change is designed to complement a federal law enacted in July, fulfilling a prior commitment by President Donald Trump, which provides similar tax exemptions at the federal level. Lawmakers anticipate this coordinated approach will maximize financial benefits for Michigan residents.

House Speaker Matt Hall emphasized the importance of state and federal alignment, stating the intention was to prevent Michiganders from facing state taxes on income already exempt federally. The legislation passed the state legislature last week and was promptly signed by Governor Whitmer as part of a broader budget package.

impact on Michigan Workers

Governor Whitmer highlighted the significance of the change for hourly workers,particularly those in the service industry. She stated, “Michiganders with hourly jobs deserve to keep their tips,” emphasizing that these earnings often represent a crucial contribution to household budgets. Preliminary estimates suggest approximately 300,000 Michigan workers will save an average of $400 annually due to the exemption on tips.

Combined with federal tax breaks, the total savings could reach $1,500 per year for many workers. For those earning overtime, the average worker is projected to save an additional $500 on state taxes, plus $1,500 federally. These savings build on recent tax relief measures,including the 2023 rollback of taxes on pension income and an expanded Earned Income Tax Credit.

Income Type	Average Annual State Savings	Average Annual Federal Savings	Total Average Annual Savings
Tips	$400	$1,100	$1,500
Overtime Pay	$500	$1,500	$2,000

Konstantinos and Aspasia Dimopoulos, owners of Mom’s Restaurant, expressed their enthusiasm for the legislation, noting it would simplify payroll processing and improve the financial well-being of their employees. Aspasia dimopoulos specifically acknowledged the long-term contributions of their first server, Cheryl Andersen, as a representative of those who will benefit from the tax relief.

Timeline and Future Considerations

While the benefits are immediate, the current tax relief is scheduled to expire on January 1, 2029, lasting for the calendar years 2026, 2027, and 2028. The federal One Big Stunning Bill Act enables workers to deduct up to $25,000 in taxable income from tips or overtime compensation.Additionally, retirees can now claim income tax exemptions of $20,000 for single filers or $40,000 for joint filers, alongside deductions for Social Security income.

Did You Know? The federal tax changes related to tips and overtime were initially proposed as part of the Tax Cuts and Jobs act of 2017, but were not fully implemented untill 2025.

Pro Tip: To ensure you receive the full benefit of these tax changes,consult with a qualified tax professional to review your individual circumstances and adjust your withholdings accordingly.

What are your thoughts on this new tax relief? Do you think the expiration date will create uncertainty for workers?

Understanding tax Benefits for Hourly Workers

Tax laws are constantly evolving,and it’s essential for workers,especially those earning income from tips or overtime,to stay informed about potential benefits. Beyond these recent changes, resources such as the IRS website and state revenue departments offer valuable guidance on tax planning and compliance. Maintaining accurate records of income and expenses is crucial for maximizing deductions and minimizing tax liabilities.

The fluctuation of tax laws emphasizes the importance of financial literacy and proactive financial planning for all workers. Seeking guidance from financial advisors and staying updated on legislative changes can help individuals navigate the complexities of the tax system and optimize their financial well-being.

Frequently Asked Questions about the Michigan Tax Relief

Share your thoughts on this new law in the comments below! What impact do you anticipate it will have on your community?

What specific documentation (forms) should content writers gather to accurately claim these new exemptions on their state income tax return?

New Legislation Exempts Tips, Overtime, and Social Security Income from State Income Tax for Content Writers

Understanding the New tax Break for Freelancers & Content Creators

A significant new piece of legislation is offering substantial tax relief to content writers, freelancers, and gig economy workers. specifically, it exempts tips, overtime pay, and Social security income from state income tax. This change, effective promptly, aims to recognize the unique financial realities of independent contractors and provide a much-needed boost to take-home pay. This article breaks down what this means for you, a content writer, and how to maximize the benefits. We’ll cover eligibility, how to report the changes, and potential long-term impacts.

What Income Streams Are Now Exempt?

Let’s clarify exactly which income sources are affected by this new law.This isn’t a blanket exemption on all income, so understanding the specifics is crucial.

* Tips: For content writers who receive tips (e.g., thru platforms offering direct client payments with tipping options), these amounts are now entirely exempt from state income tax.

* Overtime Pay: While less common for customary content writing roles, if you’ve taken on projects with guaranteed overtime rates, that additional pay is now tax-free at the state level.

* Social Security Income: A portion of your Social Security benefits may have been subject to state income tax previously. This legislation eliminates that tax.This is particularly beneficial for content writers supplementing income with Social Security.

Who is Eligible? – Defining the “Content Writer”

The legislation broadly defines eligible individuals as those earning income through freelance work, independent contracting, or the gig economy. This specifically includes:

* Freelance Content Writers: Individuals creating articles, blog posts, website copy, social media content, and other written materials for clients on a project basis.

* Independent Contractors: Content creators working directly with businesses under a 1099-NEC form.

* Gig Economy Workers: Writers utilizing platforms like Upwork, Fiverr, or Contena to find and complete writing assignments.

* Remote Content creators: Location is irrelevant; the exemption applies regardless of where the work is performed within the state.

How to Report the Changes on Your State Tax Return

Filing your state income tax return will require some adjustments to reflect this new legislation. Here’s a general guide, but always consult with a tax professional for personalized advice.

1. Review Your Income Statements: Carefully examine all 1099-NEC forms, W-2s (if applicable for overtime), and Social security statements to identify the income streams now eligible for exemption.
2. locate the Exemption Form: Your state’s Department of Revenue will likely have a new form or updated instructions for claiming these exemptions. Check their website for the latest data.
3. Accurately Calculate Exempt Amounts: Determine the exact amount of tips, overtime, and Social Security income you received during the tax year.
4. Submit with Your Return: Include the completed exemption form and your state income tax return by the filing deadline.

Important Note: the specific forms and procedures will vary by state. Stay updated on your state’s Department of Revenue website.

Potential Benefits for Content Writers

This legislation offers several key advantages for content writers:

* Increased Take-Home Pay: The moast immediate benefit is a reduction in your state income tax liability, leading to more money in your pocket.

* Improved Financial Planning: Predictable tax savings allow for more accurate budgeting and financial planning.

* Attracting & Retaining Talent: This tax break makes freelancing as a content writer more attractive,potentially boosting the industry.

* Simplified Tax Filing (Potentially): While initial adjustments are needed,the exemption could simplify future tax filings by reducing the number of income streams subject to state tax.

Real-World Example: Sarah’s Story

Sarah, a freelance content writer specializing in tech articles, earned $5,000 in tips through a client platform last year. Previously, a portion of that $5,000 would have been subject to state income tax. under the new legislation, the entire $5,000 is now exempt, resulting in significant tax savings