No Tax on Overtime for All Workers Act
Summary
What This Bill Does
The No Tax on Overtime for All Workers Act amends Internal Revenue Code section 225's definition of qualified overtime compensation. Existing qualified overtime compensation covers overtime required under section 7 of the Fair Labor Standards Act that is above the worker's regular rate. The bill adds compensation paid above the regular rate when it is paid at not less than one and one-half times the regular rate, for work for a single employer that exceeds a standard number of hours over a specified period, and is required by either a collective bargaining agreement or an agreement between the employer and employee. That agreement must have been entered before the work was performed and must specify that the standard number of hours is at least 40 hours for a seven-day work period. The change applies to taxable years beginning after December 31, 2024. In practice, more workers receiving contract-based premium overtime could have that overtime treated as qualified overtime compensation for the deduction.
Who Benefits and How
Union workers benefit if collectively bargained premium overtime becomes eligible for the overtime compensation deduction. Nonunion employees with qualifying written agreements benefit if their premium overtime above the regular rate qualifies. Employers with overtime agreements benefit from a clearer tax-preferred structure for negotiated premium overtime. Payroll software providers benefit from clearer statutory criteria for identifying deductible overtime compensation.
Who Bears the Burden and How
Treasury Secretary and IRS must administer a broader definition of qualified overtime compensation. Employers must track whether overtime was paid under qualifying pre-work agreements and at least one-and-one-half times the regular rate. Federal taxpayers bear the revenue cost if more overtime compensation is deducted. Workers without qualifying agreements may not receive the expanded tax benefit.
Key Provisions
- Expands qualified overtime compensation beyond FLSA-required overtime.
- Requires premium pay of at least one-and-one-half times the regular rate.
- Requires work above a specified standard of at least 40 hours in a seven-day work period.
- Requires a collective bargaining agreement or pre-work employer-employee agreement.
- Applies the amendment to taxable years beginning after December 31, 2024.
Evidence Chain:
This summary is generated from the full bill text using AI analysis. Expand "Detailed Analysis" below for identified beneficiaries/burden bearers with clause-level evidence links.
At a Glance
What This Bill Does
Expands the tax deduction for qualified overtime compensation to include certain collectively bargained or employer-employee agreed premium pay above the regular rate, when paid at not less than one-and-one-half times the regular rate for work exceeding a specified standard of at least 40 hours in a seven-day work period, effective for taxable years after 2024.
Key Policy Areas
Tax, Labor, Overtime
Primary Purpose
Expands the tax deduction for qualified overtime compensation to include certain collectively bargained or employer-employee agreed premium pay above the regular rate, when paid at not less than one-and-one-half times the regular rate for work exceeding a specified standard of at least 40 hours in a seven-day work period, effective for taxable years after 2024.
Policy Domains
Resolution provisions
Identified Gains
- Union workers
- Nonunion employees with overtime agreements
- Employers with overtime agreements
- Payroll software providers
Identified Costs
- Treasury Secretary
- IRS administrators
- Employers
- Federal taxpayers
- Workers without qualifying agreements
Sponsors
Legislative Progress
In CommitteeMrs. Sykes introduced the following bill; which was referred to …
Referred to the House Committee on Ways and Means.
Introduced in House
Stakeholder Effects
cui bono?How this legislation distributes effects. Mention counts reflect frequency, not effect magnitude.
Nonunion employees with overtime agreements, Union workers
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
Learn more about our methodology