PRIA Logo™
119-hr-561119th CongressWALLET

Overtime Pay Tax Relief Act of 2025

Sponsored By: Representative Bacon, Don [R-NE-2]

Introduced

Summary

Creates a temporary tax deduction for overtime compensation. This bill would let eligible workers deduct a portion of overtime pay from taxable income, with limits on how much and who qualifies.

Show full summary
  • Workers: Employees who earn overtime could deduct up to 20% of overtime relative to their regular wages from the same employer. The break applies only to amounts received through 2029.
  • Income limits: The deduction phases out based on adjusted gross income with thresholds ranging from $100,000 to $200,000 depending on filing status.
  • Non-itemizers: People who do not itemize deductions could still claim this as an above-the-line deduction.
  • Employers and payroll: The Treasury would need to update withholding tables and payroll procedures so the overtime deduction is reflected in withholding.

Personalized for You

How does this bill affect your finances?

Personalize government policy and PRIA will tell you what this bill means for your household, plus every other piece of legislation we track. PRIA reads each provision against your financial profile to show you exactly what matters to your wallet.

Free to download

Bill Overview

Analyzed Economic Effects

2 provisions identified: 2 benefits, 0 costs, 0 mixed.

Lower taxes on overtime pay

If enacted, workers could deduct some overtime pay from income. You could deduct the smaller of your overtime pay or 20% of your other wages from the same employer, and only overtime required by federal law would count. You would qualify only if your AGI is at or below $200,000 (married filing jointly), $150,000 (head of household), or $100,000 (others). You could claim it even if you take the standard deduction, and itemizers would not lose value to the usual floors or overall limits. It would apply to pay received after enactment and end for pay received after December 31, 2029.

Paycheck withholding for overtime deduction

If enacted, Treasury would update paycheck withholding to reflect the new overtime deduction. This could raise take-home pay during the year for eligible workers. Employers would follow new tables for pay received after enactment. This update would not apply to pay received after December 31, 2029.

Sponsors & CoSponsors

Sponsor

Bacon, Don [R-NE-2]

NE • R

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

No roll call votes available for this bill.

View on Congress.gov
Back to Legislation