HR 405
Keep Every Extra Penny Act of 2025
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Bill overview
The Keep Every Extra Penny Act of 2025 aims to change how federal income taxes are calculated. Specifically, it proposes to exclude overtime pay earned by employees, as mandated by the Fair Labor Standards Act, from a taxpayer's gross income. This means that the amount earned for hours worked beyond 40 in a week would not be included when determining federal income tax liability. The bill seeks to provide a tax benefit to workers who receive overtime compensation.
Key provisions
- Excludes overtime compensation from gross income.
- Overtime compensation is defined as pay for hours worked exceeding 40 per week.
- The exclusion applies to compensation required by the Fair Labor Standards Act.
- The amendment is made to the Internal Revenue Code of 1986.
- A new section (139J) is added to Part III of Subchapter B of Chapter 1.
Who is affected
- Employees
- Taxpayers
- Federal Taxpayers
Notable changes
- Current law includes overtime compensation in gross income for tax purposes.
- This bill reverses that current practice.
Fiscal impact
The Congressional Budget Office has not yet assessed the fiscal impact of this bill.
Sponsors
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Primary sponsor
Cosponsor
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119th CONGRESS — 1st Session
H. R. 405
IN THE HOUSE OF REPRESENTATIVES
A BILL
To amend the Internal Revenue Code of 1986 to exclude overtime compensation from gross income for purposes of the income tax.
This Act may be cited as the Keep Every Extra Penny Act of 2025
.
Gross income shall not include overtime compensation required under section 7 of the Fair Labor Standards Act of 1938.
The table of sections for part III of subchapter B of chapter 1 of such Code is amended by inserting after the item relating to section 139I the following new item:
The amendments made by this section shall apply to amounts received after the date of the enactment of this Act.