Creating an even bigger win for working families

OPINION:

President Trump’s mission to resurrect the American economy has paid big dividends in the first nine months of his administration. A key pillar of this progress is the recent congressional action that provided significant tax relief for working families and ensured that the hugely successful Trump tax cuts enacted in 2017 did not terminate this year.

On July 4, Mr. Trump signed the One Big Beautiful Bill Act into law. This landmark statute is an artful blend of essential tax reforms and purposeful public policy improvements related to energy, health care and national defense. Facing numerous obstacles and skeptics, House Speaker Mike Johnson and Senate Majority Leader John Thune joined Mr. Trump in producing this historic legislation in record time.

Significantly, the law’s commonsense working family tax relief makes good on Mr. Trump’s bold campaign promises, including no tax on tips and no tax on overtime pay, among others. These groundbreaking tax cuts put working families and job creators first by recognizing and rewarding their vital contributions to the U.S. economy.

The Trump administration should act quickly to ensure that working families and small businesses reap the benefits of these key advancements. In particular, the Treasury Department is correctly focused on implementing the working family tax relief for tips and overtime pay. The Treasury Department and the Internal Revenue Service, the federal agency tasked with this duty, recently released a notice of proposed rulemaking guidelines for setting definitions for occupations that qualify for no tax on tips. The IRS has also issued guidance for workers and employers stating that there should be no overtime pay or tax on car loan interest.

More needs to be done. The working families tax relief enacted by Congress this year has the potential to be a game-changer for hourly and service workers. However, the related details and policies are becoming hard to understand and implement because of the remaining complexities in the tax code and the government guidance that is yet to be written. In addition, the IRS is an inefficient federal agency with a history of misplaced priorities, enforcement overreach and chronic mismanagement.

Treasury Secretary Scott Bessent is to be commended for recognizing these shortcomings and for his leadership in improving and modernizing the IRS. Related reforms must include better technology, a customer-first posture and working families’ ability to pay their taxes as simply and inexpensively as possible. These goals can be accomplished by enhancing or establishing feasible public-private partnerships that are designed to commence quickly, are helpful to taxpayers and are easy and economical for working families to use.

A prototype to consider is Direct File, an initiative that provides a framework for the government to do better with less. Direct File has been operational for the past two years and enabled Americans with simpler federal tax returns (including taxpayers eligible for the earned income tax credit, the child tax credit and seniors who use forms such as 1099-Rs) to submit their returns directly to the IRS free of charge.

This lapsed program could quickly be retooled and repurposed, providing a one-stop shop with elements such as a tax calculator, FAQs and other resources to help working families answer eligibility questions, understand their filing obligations, and conveniently and cost-effectively file their tax returns. The program could also be transformed and streamlined by creating an app, leveraging AI, or incorporating other technology platforms to allow working families to file basic returns with the IRS.

Mr. Trump and congressional Republicans have successfully lowered the tax burden for working families since 2017 with the Tax Cuts and Jobs Act. The coming months will determine whether the administration, through swift action, can effectively realize the full potential of the One Big Beautiful Bill Act and its remarkable tax relief for working families. The prompt delivery of necessary tools and information, empowering workers and job creators, would go a long way toward achieving this goal and help supercharge efforts to revitalize the American economy.

• Rob Green is a former workforce policy director for the House Committee on Education and Workforce. He previously served as a senior executive in government relations representing restaurants and retail businesses.