This bill would stop the federal government from taxing your overtime pay. Overtime pay that is required for working more than 40 hours in a week under the Fair Labor Standards Act would no longer count as taxable income on your federal return. Right now, overtime is taxed like regular pay; this would change that so those overtime dollars are excluded from your gross income for federal taxes.

Key points:

• Who is affected: Workers who earn overtime for hours over 40 in a week, as defined by federal labor law.
• What changes: Overtime pay required by law would be excluded from federal taxable income, instead of being taxed like regular wages .
• What it means: More of your overtime pay stays in your pocket because you wouldn’t owe federal income tax on that portion of your earnings.