Keep Every Extra Penny Act of 2025

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.