S 1046
No Tax On Overtime Act of 2025
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Bill overview
This bill would change federal income tax law to exclude overtime pay from a taxpayer's gross income. Currently, overtime compensation is included when calculating taxes. This change would align with the Fair Labor Standards Act, which requires employers to pay overtime for hours worked over 40 in a week. The bill aims to simplify the tax process for workers who receive overtime.
Key provisions
- Excludes overtime compensation from gross income.
- Applies to overtime pay as defined by the Fair Labor Standards Act.
- Modifies the Internal Revenue Code to implement the exclusion.
- Creates a new section (139J) within Part III of Subchapter B of Chapter 1.
- Updates the table of sections to reflect the new section.
Who is affected
- Taxpayers
- Employees who receive overtime pay
- Federal income tax filers
Notable changes
- Changes current tax law regarding the inclusion of overtime in gross income.
Fiscal impact
The Congressional Budget Office has not yet assessed the fiscal impact of this bill.
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119th CONGRESS — 1st Session
S. 1046
IN THE SENATE OF THE UNITED STATES
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 No Tax On Overtime 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.