Did the no tax on overtime pass? Yes. The no tax on overtime bill was included in the One Big Beautiful Bill that President Trump signed into law in July 2025. This new law creates a first-of-its-kind tax exemption for certain overtime pay, effective beginning in tax year 2025.
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.
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, overtime pay is not taxed differently than your regular pay. While your rate of pay is higher when you get overtime, that does not mean that you'll be taxed at a higher rate. Whether your pay rate is your standard rate or overtime pay rate, you'll pay the same tax rate, which depends on your tax bracket.
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.
The Tax Cuts and Jobs Act of 2017 (TCJA) is the unofficial name for the large set of changes to the Revenue Code of 1986, signed into law by President Trump in 2017.
The no tax on overtime deduction begins with the 2025 tax year. That means you'll first claim it when you file your tax return in early 2026. However, the provision is not permanent.
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.
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.
No tax on tips or overtime bill advances in Assembly with bipartisan support. Assembly lawmakers approved a bill Thursday to eliminate income taxes on cash tips and some overtime work, reflecting provisions established nationally by President Donald Trump's administration and embraced by lawmakers from both parties.
April 10, 2025, the House adopted the Senate's amended version of the budget resolution, which allows $5.3 trillion in deficit-financed tax cuts (the combination of $3.8 trillion of tax cuts assumed to be “costless” under a current policy baseline plus $1.5 trillion in additional deficits permitted), deficit increases ...
President Trump's Tax Cuts and Jobs Act is slated to be in effect from 2018 to 2025. Throughout the tax years within the TCJA period, taxpayers will likely see an increase in their tax cuts. However, by 2025 when the TCJA expires, all individual tax cuts expire too.
President Donald Trump then signed the bill into law on December 22, 2017.
The One, Big, Beautiful Bill Act significantly affects federal taxes, credits and deductions. It was signed into law on July 4, 2025, as Public Law 119-21, and takes effect in 2025.
Trump Tax Plan Changes: Standard Deduction
The 2017 Trump tax law (TCJA) nearly doubled the standard deduction for all filers, and OBBB bumped them up. If you're a single filer or if you're married filing separately, your standard deduction for 2025 rose to $15,750 under OBBBA.
Bonuses under $1 million are typically taxed at a flat rate of 22%. Example: If you receive a bonus of $20,000, the flat federal tax rate of 22% would amount to $4,400. If you receive a bonus above $1 million, you'd pay the 22% rate on the first million. Beyond that, the rate jumps to 37%.
Bonus contributed pre-tax to super
For example, tax on a $50,000 bonus: Paid to you and your marginal tax rate is 32.5% = $16,250. Paid to you and your marginal tax rate is 37% = $18,500.