H. R. 561

Overtime Pay Tax Relief Act of 2025

Shown here: Introduced in House (2025-01-20)

To amend the Internal Revenue Code of 1986 to establish a deduction for certain overtime payments.

1. Short title

This Act may be cited as the “Overtime Pay Tax Relief Act of 2025”.

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:

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.

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