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Overtime Pay Tax Relief Act of 2025
To amend the Internal Revenue Code of 1986 to establish a deduction for certain overtime payments.
Summary
This bill creates a tax deduction for overtime compensation paid to individual workers. The deduction allows individuals to deduct up to 20 percent of their regular wages from overtime compensation received from the same employer during a taxable year. The deduction is only available to individuals whose adjusted gross income does not exceed $100,000 (or $150,000 for head of household filers, or $200,000 for married couples filing jointly). The deduction is available to both itemizers and non-itemizers and expires on December 31, 2029. The Treasury Department must modify tax withholding procedures to account for this deduction.
AI-generated plain-language summary of the bill text — neutral, and may be imperfect. See the full text below for the exact wording.
Sponsor (1)
- Rep. Bacon, Don [R-NE-2] (R-NE)
Actions (2)
- Jan 20, 2025 Referred to the House Committee on Ways and Means. · house
- Jan 20, 2025 Introduced in House
Similar bills (6)
Bills with similar text or summary — includes reintroductions across Congresses. Ranked by semantic similarity of the bill text (computed locally); a neutral discovery aid, not a claim the bills are duplicates.
Text versions (1)
Bills are re-published as they move (Introduced → Reported → Engrossed → Enrolled …). Each stage below is a separate text; pick two to see what changed. Data from Congress.gov.
Full text
IN THE HOUSE OF REPRESENTATIVES
January 20, 2025
Mr. Bacon introduced the following bill; which was referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to establish a deduction for certain overtime payments.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the “Overtime Pay Tax Relief Act of 2025”.
SEC. 2. DEDUCTION FOR OVERTIME COMPENSATION.
(a) In General.—
(1) Deduction allowed.—Part VII of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by redesignating section 224 as section 225 and by inserting after section 223 the following new section:
“SEC. 224. OVERTIME COMPENSATION.
“(a) In General.—There shall be allowed as a deduction an amount equal to so much of any overtime compensation received by an individual as does not exceed 20 percent of such individual’s other wages from the same employer for the taxable year.
“(b) Overtime Compensation.—For purposes of this section, the term ‘overtime compensation’ means overtime compensation required under section 7 of the Fair Labor Standards Act of 1938.
“(c) Limitation.—No deduction shall be allowed under subsection
(a) for any taxpayer whose adjusted gross income for the taxable year exceeds—
“(1) in the case of a married couple filing jointly, $200,000,
“(2) in the case of a head of household, $150,000, or
“(3) in the case of any other individual, $100,000.
“(d) Termination.—No deduction shall be allowed under subsection
(a) for any amounts received after December 31, 2029.”.
(2) Conforming amendment.—The table of sections for part VII of subchapter B of chapter 1 of such Code is amended by redesignating the item relating to section 224 as relating to section 225 and by inserting after the item relating to section 223 the following new item:
“Sec. 224. Overtime payments.”.
(b) Deduction Allowed to Non-Itemizers.—Section 63(b) of the Internal Revenue Code of 1986 is amended by striking “and” at the end of paragraph (3), by striking the period at the end of paragraph (4) and inserting “and”, and by adding at the end the following new paragraph:
“(5) the deduction provided in section 224.”.
(c) Non-Application of Certain Limitations for Itemizers.—
(1) Deduction not treated as a miscellaneous itemized deduction.—Section 67(b) of the Internal Revenue Code of 1986 is amended by striking “and” at the end of paragraph (11), by striking the period at the end of paragraph (12) and inserting “, and”, and by adding at the end the following new paragraph:
“(13) the deduction under section 224 (relating to overtime compensation).”.
(2) Deduction not taken into account under overall limitation.—Section 68(c) of the Internal Revenue Code of 1986 is amended by striking “and” at the end of paragraph (2), by striking the period at the end of paragraph (3) and inserting “, and”, and by adding at the end the following new paragraph:
“(4) the deduction under section 224 (relating to overtime compensation).”.
(d) Withholding.—The Secretary of the Treasury (or the Secretary’s delegate) shall modify the tables and procedures prescribed under section 3402(a) of the Internal Revenue Code of 1986 to take into account the deduction allowed under section 224 of such Code (as added by this Act).
(e) Effective Date.—The amendments made by this section shall apply to amounts received after the date of the enactment of this Act. <all>
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