No Tax on Overtime for All Workers Act

This bill lets workers deduct certain overtime pay from their federal taxable income. In simple terms, if your overtime meets the rules below, you would pay less federal income tax on that overtime pay. The change applies to tax years starting after December 31, 2024.

Overtime that qualifies includes:

• Overtime required by federal law (time-and-a-half for hours over 40 in a 7-day week) above your regular rate, or similar overtime arrangements that pay at least 1.5 times your regular rate, are for hours over a set weekly standard, and come from an agreement made before the work begins. That agreement must set the weekly standard at 40 hours or more for one employer.

Key points:

• Who is affected: Employees who earn qualifying overtime, including those covered by federal overtime rules or a pre-agreed overtime plan that pays at least time-and-a-half.
• What changes: You can deduct qualifying overtime pay, lowering your taxable income and likely your tax bill.
• When: Starts for tax years after December 31, 2024.