Bill · H.R. 561· House(119-HR-561)
Overtime Pay Tax Relief Act of 2025
- Introduced
- 1/20/2025
- Last activity
- 1/20/2025 — Referred to the House Committee on Ways and Means.
- Sponsored by
- Don Bacon
- Cosponsors
- None
- Introduced
- In Committee
What this bill would do
The Overtime Pay Tax Relief Act of 2025 aims to amend the Internal Revenue Code of 1986. It proposes to establish a new deduction for certain overtime compensation. This deduction applies to overtime required under the Fair Labor Standards Act of 1938. The deduction is limited to 20 percent of an individual's other wages from the same employer. There are specific income limits based on filing status that determine eligibility. Finally, the deduction is set to terminate after December 31, 2029.
Yes· 3 of 7
Does this cut taxes for middle-income families?+5
The bill provides a new tax deduction for overtime compensation for individuals earning under certain income thresholds.
Would households on low incomes be better off under this?+4
The deduction specifically targets those under income thresholds, providing relief to lower-earning workers.
Would middle-income households be better off under this?+4
Middle-income workers earning overtime are eligible for this new tax deduction.
The opposite
Does this reduce what the federal government spends?-2
The new tax deduction reduces federal tax revenue through a reduction in the tax burden.
Who it would affect, and how
Potential Positive Impacts for People
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Tax Deduction for Overtime Earners: Individuals can claim a deduction for overtime compensation received, which is limited to 20 percent of their other wages from the same employer (Section 2, subsection a, paragraph 1).
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Accessibility for Non-Itemizers: The bill allows the deduction to be used by those who do not itemize their deductions (Section 2, subsection b).
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Tax Relief through Withholding: The Secretary of the Treasury is directed to modify withholding procedures to account for this deduction (Section 2, subsection d).
Potential Negative Impacts for People
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Income Limitations: The deduction is not available to taxpayers whose adjusted gross income exceeds $200,000 for married couples filing jointly, $150,000 for heads of household, or $100,000 for other individuals (Section 2, subsection a, paragraph 1, subsection c).
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Deduction Cap: The amount of the deduction is capped at 20 percent of the individual's other wages from the same employer for the taxable year (Section 2, subsection a, paragraph 1, subsection a).
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Time Limitation: The deduction will not be allowed for any amounts received after December 31, 2029 (Section 2, subsection a, paragraph 1, subsection d).
Groups and Interests Ranking
Every group the model scored this bill for, from -10 to +10. Hover a score for the reason it gave.
- Demographic And Interest Groups
- Good For Low Income Households+4Good For Middle Class Households+4Good For Union Workers+3Good For Young Adults+3
- Economy And Finance
- Reduces Middle Class Taxes+5Increases Minimum Wage+1Reduces Government Spending-2
- Social Issues And Justice
- Improves Poverty Reduction+2
- 1/20/2025
- Referred to the House Committee on Ways and Means.
- Introduced in House