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The bill temporarily increases take-home pay for eligible multi-job hourly workers but does so by shrinking the payroll-tax base and requiring general-fund backfills—raising federal costs, risking lower future benefits, and adding employer compliance burdens.
Hourly workers who hold a primary hourly job and a second job (especially those with MAGI below $100,000 / $150,000 MFJ) can exclude secondary-job wages from taxable gross income, increasing take-home pay and lowering federal income tax liability.
The exclusion is temporary (sunsets after 5 years), so the boost to workers is limited-term and does not create a permanent, open-ended change to the tax code or long-term budget baseline.
The change reduces the payroll-tax base and therefore could lower future Social Security and Medicare benefit accruals for affected workers unless fully offset.
Congressional transfers from the general fund would be required to make Social Security, Disability, and Medicare trust funds whole, increasing federal outlays and shifting costs onto taxpayers.
Employers and payroll processors must track elections, hourly thresholds, and excluded wages separately for income- and employment-tax withholding, creating meaningful administrative complexity and compliance costs.
Based on analysis of 2 sections of legislative text.
Introduced January 20, 2025 by Donald J. Bacon · Last progress January 20, 2025
Excludes pay from a worker's secondary (non-primary) job from federal gross income and from FICA/FUTA/wage withholding for qualifying taxpayers, with a MAGI phase-out beginning above $100,000 ($150,000 married filing jointly) that phases out over $50,000. Taxpayers can designate a primary employer if paid hourly and they worked at least 2,080 hours for that employer in the tax year. The exclusion sunsets five years after enactment and applies to amounts received after the date of enactment. The bill requires transfers from the general fund to make Social Security and Medicare trust funds whole for revenue lost because of the exclusion.