# Plain Language Summary: No Tax On Overtime Act of 2025

This bill would eliminate federal income taxes on overtime pay. In practical terms, if you work extra hours beyond your regular 40-hour work week and earn overtime compensation, that overtime money would no longer be subject to federal income tax. So if you normally earn $20 per hour and get paid time-and-a-half for overtime ($30 per hour), the extra $10 per hour portion would be tax-free under this proposal.

The main benefit would go to workers who regularly work overtime—think nurses picking up extra shifts, construction workers on large projects, factory workers during busy seasons, or anyone else whose job involves hours beyond the standard workweek. These workers would keep more of their overtime earnings since they wouldn't owe federal taxes on that portion of their paycheck. For someone working 10 hours of overtime per week at $30 per hour, this could mean saving several hundred dollars per year in federal taxes, depending on their tax bracket.

However, this change would reduce federal tax revenue, which means less money coming into the government. This could affect government spending on programs and services, or potentially require other tax increases or spending cuts to make up the difference. The bill also raises questions about how it would be administered—employers would need clear guidance on how to calculate and report overtime income separately from regular income on tax forms.

No Tax On Overtime Act of 2025

Hawley, Josh

No Tax On Overtime Act of 2025This bill excludes from gross income for federal income tax purposes overtime compensation paid for hours worked in excess of 40 hours per week (as required by the Fair Labor Standards Act of 1938).&nbsp;Under current law, overtime compensation paid to a taxpayer is included in gross income for purposes of calculating federal income taxes.