Section 1 Short title
This Act may be cited as the “No Tax on Overtime Act”.
No Tax on Overtime Act
A BILL
To amend the Internal Revenue Code of 1986 to allow a deduction for qualified overtime compensation.
Sec. 2 No tax on overtime
Deduction allowed— Part VII of subchapter B of chapter 1 is amended by redesignating section 224 as section 225 and by inserting after section 223 the following new section:
“224. Qualified overtime compensation
“(a) In general—There shall be allowed as a deduction an amount equal to the qualified overtime compensation received during the taxable year.
“(b) Limitations
“(1) Maximum hours—For purposes of determining the amount of the deduction allowed under subsection (a), the amount of qualified overtime compensation taken into account under subsection (a) for any taxable year shall not exceed the amount of such compensation which relates to not more than 300 hours of service.
“(2) Joint returns—In the case of a joint return, paragraphs (1) and (2) shall be applied separately with respect to the qualified overtime compensation of each spouse.
“(3) Phaseout based on modified adjusted gross income—The amount of the deduction under subsection (a) (after the application of paragraphs (1), (2), and (3)) shall be reduced by $100 for every $1,000 by which the modified adjusted gross income of the taxpayer for the taxable year exceeds $100,000 ($200,000, in the case of a joint return).
“(4) Modified adjusted gross income—For purposes of this subsection, the term “modified adjusted gross income” means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section 911, 931, or 933.
“(c) Qualified overtime compensation—For purposes of this section, the term qualified overtime compensation means overtime compensation paid to an individual required under section 7 of the Fair Labor Standards Act of 1938 that is in excess of the regular rate (as used in such section) at which such individual is employed.
“(d) Social security number required—No deduction shall be allowed under this section with respect to qualified overtime compensation unless the taxpayer includes the social security number (as defined in section 24(h)(7)) of the individual to whom such compensation was paid on the return of tax for the taxable year.”
Deduction allowed to non-Itemizers— Section 63(b) 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 225.”
Requirement To include overtime compensation on W–2— Section 6051(a) is amended by striking “and” at the end of paragraph (16), by striking the period at the end of paragraph (17) and inserting “, and”, and by inserting after paragraph (17) the following new paragraph:
“(18) the total amount of qualified overtime compensation (as defined in section 225(c)).”
Omission of correct social security number treated as mathematical or clerical error— Section 6213(g)(2) is amended by striking “and” at the end of subparagraph (U), by striking the period at the end of subparagraph (V) and inserting “, and”, and by inserting after subparagraph (V) the following new subparagraph:
“(W) an omission of a correct social security number required under section 225(d) (relating to deduction for qualified overtime).”
Clerical amendment— The table of sections for part VII of subchapter B of chapter 1 is amended by redesignating the item relating to section 224 as an item relating to section 225 and by inserting after the item relating to section 223 the following new item:
Withholding— The Secretary of the Treasury (or the Secretary’s delegate) shall modify the tables and procedures prescribed under section 3402(a) to take into account the deduction allowed under section 224 (as added by this Act).
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2024.