Many workers would keep more overtime pay because qualifying overtime would not count as taxable income. The rule would cover overtime required by federal labor law. It would apply only after the bill becomes law.
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No Tax On Overtime Act of 2025 is a Senate bill in committee. The latest recorded action: Read twice and referred to the Committee on Finance.
Latest action on S. 1046: Read twice and referred to the Committee on Finance.
Who this affects: This bill mainly affects workers who earn overtime covered by the Fair Labor Standards Act. Those workers could keep more of their overtime checks because the federal government would not tax that qualifying overtime as income. Employers may need to track which overtime qualifies for the tax break. The federal government could collect less income tax from covered overtime pay.
Why this matters: This bill matters because many workers could keep more money from extra hours they already work. It would give a direct tax break on qualifying overtime pay. It could also lower federal tax revenue. The exact effect would depend on how many workers earn covered overtime and each worker's tax situation.
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