No Tax on Overtime for All Workers Act

No Tax on Overtime for All Workers Act would amend the Internal Revenue Code to create a new deduction for “qualified overtime compensation.” Under the bill, qualified overtime compensation is either (A) overtime pay required by the Fair Labor Standards Act (FLSA) that is above the employee’s regular rate, or (B) any pay above the regular rate that meets three conditions: (i) the pay is at least 1.5 times the regular rate, (ii) it applies to work for a single employer beyond a defined standard number of hours in a period, and (iii) the arrangement is set by a collective bargaining agreement or a pre-work employer-employee agreement that specifies a standard of at least 40 hours per 7-day period. The effect would be to allow a deduction for such qualified overtime compensation, reducing taxable income for the payer. The proposal applies to taxable years beginning after December 31, 2024. The bill was introduced in the House by Mrs. Sykes and referred to the Committee on Ways and Means; it is not yet law.