There’s an unexpected winner when it comes to President Donald Trump’s signature tax break for overtime wages: workers in the U.S. territories. Internal data from the IRS shows people in territories claimed far bigger overtime deductions than taxpayers elsewhere. They collectively reported an average deduction of $7,078, more than twice the average of about $3,100, and substantially larger than in any individual state.
That wasn’t what Republicans intended when they created the break as part of their 2025 tax cuts in hopes of appealing to working-class voters, especially in the battleground states that returned Trump to the White House in 2024. Nor is it obvious why deductions in the territories were so big.
The data, released to POLITICO, comes in the heat of the midterm campaigns, as Republicans fight to hang onto control of Congress, plugging the tax cuts they passed last year as part of their “big, beautiful” megabill.
The IRS data does not list territories individually. In the states, meanwhile, taxpayers in Alaska saw the biggest average deduction, at $4,952, followed by Texas with $3,973 and Wyoming’s $3,827. Vermont saw the smallest deductions, with an average $2,404.
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