The No Tax on Overtime for All Workers Act would allow workers to deduct overtime compensation from their federal income taxes. The bill applies to employees covered by federal labor laws who earn overtime pay above their regular hourly rate, including both workers subject to the Fair Labor Standards Act and certain railroad and airline employees covered under the Railway Labor Act. Under the bill, overtime compensation would only qualify for the deduction if it's paid under an agreement between the employee and employer made before the work is performed, and the agreement establishes that overtime begins after 40 hours per week (or follows other specified thresholds for certain transportation workers). The legislation would take effect for tax years beginning after December 31, 2024. The bill has no specified funding provisions, as it functions as a tax deduction rather than a spending program.
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