Union Strike Pay Becomes Tax-Free Under New Bill, Boosting Picket Line Earnings Starting 2025

The aptly named Picket Line Protection Act of 2025 is straightforward: it aims to make life a little easier for workers who are on strike. Specifically, it changes how the federal government treats the money a union pays its members during a work stoppage.

The New Bottom Line: Strike Pay is No Longer Taxable

Right now, if you’re on strike and your union pays you strike benefits to cover lost wages, the IRS treats that money as taxable income. You have to pay federal income tax on it, just like you would on your regular paycheck. This bill, under Section 2, changes that entirely. If you receive money from your labor organization (the 501(c)(5) kind) to make up for wages lost during a strike, that compensation will no longer be counted as taxable income.

Think about it this way: If your union currently pays you $500 a week in strike pay, you might only see $400 or $425 of that after taxes are taken out. Under this new rule, that full $500 hits your bank account. For a worker trying to keep up with rent, groceries, and bills while fighting for a better contract, that extra 15% to 20% can be the difference between making ends meet and falling behind. This tax exemption applies to any strike compensation received on or after January 1, 2025.

The Real-World Impact on the Wallet

This is a direct financial benefit to workers engaged in collective bargaining. When a strike drags on, every dollar counts. By making strike pay tax-free, the bill essentially increases the purchasing power of those benefits. It makes the union’s strike fund go further for the individual worker and provides a stronger financial cushion during a challenging time. For the average worker, this means less stress about the tax bill come April, and more money immediately available for necessities.

The bill is notably clear and low on vagueness. It explicitly targets payments made to cover wages you lost because you were on strike and applies only to payments from qualified labor organizations. The only group that feels a direct financial impact outside of the workers themselves is the U.S. Federal Treasury, which will see a minor reduction in tax revenue from this specific income source. Overall, this legislation is a clear win for labor, providing tangible economic relief right when workers need it most.