The no tax on overtime bill was included in the One Big Beautiful Bill that President Trump signed into law in July 2025.
Yes, No Tax on Overtime was bundled into the sweeping tax act that became law on July 4, 2025. It also included a separate provision called “No Tax on Tips,” which allows certain taxpayers in eligible occupations to deduct up to $25,000 in voluntary tipped income from their federal tax return.
No tax on overtime pay
OBBBA allows eligible workers to deduct "qualified overtime pay" on federal returns. The break is capped at $12,500 for single filers or $25,000 for married couples filing jointly. This tax break phases out for higher earners. This is a tax break only for overtime pay, not all wages.
Overtime isn't taxed at a higher rate, but it can feel like it because higher earnings in one paycheck lead to higher tax withholding, potentially pushing you into a higher tax bracket for that income; however, new 2025-2028 federal legislation allows a temporary deduction (up to $12,500/$25,000) for qualified overtime pay on your tax return, reducing your overall taxable income for that period.
Taxing overtime is generally seen as bad policy because it creates inequity, potentially discourages work, benefits the wealthy more, distorts labor markets, reduces vital tax revenue for public services, and can harm future Social Security benefits, all while failing to address underlying wage issues effectively. It makes tax codes complex, allowing high earners to exploit loopholes by converting salary to tax-free overtime, and can incentivize companies to overwork employees rather than offer raises, harming worker well-being.
The Congressional Budget Office (CBO) estimated in 2018 that the 2017 law would cost $1.9 trillion over ten years, and recent estimates show that making the law's temporary individual income and estate tax cuts permanent would cost roughly another $4.2 trillion through 2035.
No such program exists officially under IRS or U.S. Treasury rules. IRS debt can only be reduced through existing programs like Offer in Compromise. His tax policy focuses on tax cuts, not back-tax forgiveness. Beware of misleading ads claiming that your tax debt will disappear under Trump's plan.
The One Big Beautiful Bill Act (OBBBA) or the Big Beautiful Bill (P.L. 119-21), is a U.S. federal statute passed by the 119th United States Congress containing tax and spending policies that form the core of President Donald Trump's second-term agenda. The bill was signed into law by Trump on July 4, 2025.
If the individual tax cuts expire, taxpayers in all income groups would face higher and more complicated taxes. Machinery and equipment expensing is a key provision that, if allowed to expire, would especially harm capital-intensive industries like manufacturing.
The Tax Cuts and Jobs Act of 2017 was legislation passed by the 115th Congress and signed into law by President Donald Trump.
The overtime deduction allows eligible workers to subtract up to $12,500 of overtime pay from their federal taxable income (up to $25,000 for married couples filing a joint return). However, the deduction is gradually reduced once your modified adjusted gross income (MAGI) hits a certain amount.
Working overtime often isn't worth it due to serious health risks (stress, fatigue, heart issues), decreased productivity and focus, burnout, poor work-life balance, higher accident rates, and potentially diminishing financial returns from taxes, all while negatively impacting personal life, relationships, and overall well-being. While it offers extra pay, the hidden costs to health and personal time usually outweigh the benefits, especially if consistent, says this analysis from CreditNinja and this post on Indeed.
The historic law — which includes No Tax on Tips, No Tax on Overtime, No Tax on Social Security, an expanded Child Tax Credit, Made in America tax breaks, small business tax cuts, and much more — is a cornerstone of President Trump's economic agenda, which is taming inflation, driving historic investments, and fueling ...
1837: Andrew Jackson
This resulted in a huge government surplus of funds. (In 1835, the $17.9 million budget surplus was greater than the total government expenses for that year.) By January of 1835, for the first and only time, all of the government's interest-bearing debt was paid off.
Lawmakers have passed legislation called the “One Big Beautiful Bill Act” to make the expiring tax cuts permanent, provide additional tax cuts and changes to the tax code, and reduce spending. President Trump signed the bill into law on July 4, 2025.
The Big Ugly Law sets a new precedent for wealth transfers to the ultra-rich. In 2017, Trump and Republicans passed the so-called Tax Cuts and Jobs Act (TCJA), a historically bad bill which increased the deficit by $1.9 trillion .
$13.50 an hour is $28,080 per year, assuming a standard 40-hour workweek for 52 weeks a year, calculated by multiplying $13.50 by 2,080 (40 hours x 52 weeks). This is a gross annual salary before taxes, deductions, or paid time off.
For a $17.50/hour rate, overtime pay (typically time-and-a-half) is $26.25 per hour ($17.50 x 1.5) for hours worked over 40 in a week, resulting in $420 for 8 hours of overtime, or an extra $210 on top of regular pay for 8 overtime hours. The basic calculation is your hourly rate (e.g., $17.50) multiplied by 1.5 (for time-and-a-half) and then by the number of overtime hours worked.
The reason more tax might be withheld is that your total income for the pay period has increased, potentially making it look like you're being taxed more. In reality, your total income for the year determines your tax bracket, not the type of income you earn (whether regular or overtime).