The No Tax on Overtime Act would allow workers to deduct qualifying overtime compensation from their federal income taxes. The deduction applies to overtime pay required under the Fair Labor Standards Act and is capped at 300 hours of overtime per year; for married couples filing jointly, each spouse can claim the deduction separately for up to 300 hours. However, the deduction phases out for higher earners, reducing by $100 for every $1,000 of income above $100,000 (or $200,000 for joint returns), meaning it primarily benefits middle-income and lower-income workers who earn overtime. The bill requires employers to report overtime compensation separately on W-2 forms and takes effect for tax years beginning after December 31, 2024. No specific funding is allocated, as the bill reduces federal tax revenue rather than appropriating money.
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