No Tax On Overtime Act of 2025
No Tax On Overtime Act of 2025
Plain Language Summary
# No Tax On Overtime Act of 2025 Summary **What the Bill Would Do** This bill would allow workers to exclude overtime pay from their federal income taxes. Currently, all wages—including overtime pay for hours worked beyond 40 per week—count toward a worker's taxable income. If passed, overtime compensation would no longer be taxed, potentially putting more money in workers' paychecks. **Who It Affects** The bill would primarily benefit workers who regularly earn overtime pay, including hourly employees in manufacturing, healthcare, construction, and other industries.
Self-employed individuals and salaried workers who don't receive overtime pay under federal law would not be affected. **Current Status** The bill was introduced by Senator Josh Hawley (R-Missouri) in the 119th Congress and is currently in committee, meaning it has not yet been debated or voted on by the full Senate. There is no indication of when or if it will advance further in the legislative process.
CRS Official Summary
No Tax On Overtime Act of 2025This bill excludes from gross income for federal income tax purposes overtime compensation paid for hours worked in excess of 40 hours per week (as required by the Fair Labor Standards Act of 1938). Under current law, overtime compensation paid to a taxpayer is included in gross income for purposes of calculating federal income taxes.
Latest Action
Read twice and referred to the Committee on Finance.