Starting in 2025, the "One Big Beautiful Bill Act" allows for a temporary federal tax deduction on overtime pay (2025–2028). Eligible employees can deduct up to $12,500 ($25,000 for joint filers) of qualified, FLSA-required overtime premium pay, with phase-outs for high earners. Additionally, the FLSA salary threshold for overtime exemption rose to $58,656 on January 1, 2025.
However, the deduction is temporary – it only applies for the 2025 through 2028 tax years. Eligible workers can deduct up to $12,500 of overtime pay earned during the year (up to $25,000 for married couples filing a joint return).
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.
This bill shortens the standard workweek under federal law from 40 hours to 32 hours over a three-year phase in period. It also requires specified overtime pay for workdays longer than eight hours.
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.
The "No Tax on Overtime" provision (part of the 2025 OBBB Act) works as a federal income tax deduction, allowing eligible employees to reduce taxable income by the premium portion (the extra half) of their time-and-a-half pay, up to $12,500 ($25,000 joint), for tax years 2025-2028, phasing out at higher incomes but still subject to payroll taxes.
Yes. Following a series of important legal cases brought by unions, it is now established that holiday pay must be your 'normal' wages. This means it must include all the pay components you would normally have earned had you not been on holiday.
The most significant recent "new overtime rule" isn't about who gets overtime, but a temporary federal tax change: the "No Tax on Overtime" deduction for the premium portion (the extra 0.5x) of FLSA overtime pay, available for tax years 2025-2028, allowing up to $12,500 ($25,000 joint) to be deducted from federal income tax for non-exempt workers, subject to income phase-outs. This stems from the July 2025 One Big Beautiful Bill Act (OBBB) and applies to federal income tax only, not Social Security or Medicare.
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 standard deduction increased for 2025 and 2026, and a new temporary “bonus” deduction for adults 65 and older begins in 2025. The child tax credit increased to $2,200 for the 2025 and 2026 tax years; retirement plan contribution limits for IRAs and 401(k)s also increased for 2026.
To qualify for the "No Tax on Overtime" federal income tax deduction (for 2025-2028), you must be a Fair Labor Standards Act (FLSA)-covered, non-exempt employee who earns qualified overtime (like the "half" in time-and-a-half) and meets income limits: generally under $150k MAGI (single) or $300k MAGI (joint), with the deduction phasing out above those levels. It applies to the premium portion of overtime pay and requires reporting on your W-2, but payroll taxes (FICA) still apply, and some workers, like certain rail or highly-paid exempt employees, are excluded.
Yes, working overtime can lead to a bigger tax refund, not because overtime is taxed more (it isn't, usually), but due to a new federal deduction (starting 2025) that lets eligible workers deduct the premium portion (e.g., the extra half in time-and-a-half) of overtime pay, lowering your taxable income and potentially increasing your refund or decreasing your tax bill when you file, though payroll taxes (FICA) still apply.
The No Tax on Overtime starts with overtime earned on or after January 1, 2025. Employers must be able to track and report overtime separately on your W-2 starting from that point. The current end date for the provision is December 31, 2028, but Congress may choose to extend it in the future.
The Occupational Safety and Health Administration (OSHA) says that a normal work shift is no more than 8 consecutive hours in a day, with each shift split by at least 8 hours of rest. A normal workweek is 5 such work days. However, this is not binding. OSHA does not penalize employers who demand more.
North Dakota earned the No. 1 spot as the hardest-working state in the U.S., according to a new analysis published by WalletHub. The personal finance website released its 2025 survey, “Hardest-Working States in America,” on Aug.
The 9-9-6 rule is a demanding work schedule, especially prevalent in China's tech sector, meaning employees work from 9 a.m. to 9 p.m., six days a week, totaling 72 hours weekly, and is associated with burnout, health risks, and being declared illegal by Chinese authorities, despite some recent advocacy for intense work ethics.
To buy a house, you generally need an income that allows for housing costs (mortgage, taxes, insurance) to be around 28-36% of your gross monthly income, but recent studies show buyers often need $100k+ annual income to afford a median-priced home due to rising prices and rates, with specific requirements varying by location and loan type. A common guideline is the 28/36 rule: spend no more than 28% on housing and 36% on total debt, but lenders look at your Debt-to-Income (DTI) ratio, ideally keeping total debt under 43%.