What happens if "no taxes on overtime" passes ?

The current proposed bill only affects federal income tax on overtime pay, It does not exclude social security or medicare deductions, or any state taxes that would apply.

it will only apply to non-exempt positions. If your current employment does not have an overtime provision, or is exempt from overtime provision, then it would not apply. There is a big question concerning this very thing, what IS overtime. Who’s definition will apply.

As the general guidelines are currently written for this, you would not actually see a reduction in taxes taken from your paycheck. Your employer is responsible for deciding what IS overtime, and the reporting that on the W-2, then it would be a deduction against gross earnings, thus reducing the tax burden, For federal income tax only.

 

Is this going to take effect on January 01, 2026 then?

I wonder if this just widens the salary gap between hourly employees and OTR drivers even more so than what it already is.

 

Interstate carriers are exempt from paying OT so I dont think those drivers will see a difference. For the carriers that are paying OT over 40, that could be a nice bump in pay for those drivers pulling 60 hour weeks.

 

Yeah, as an O/OP paying myself as a 1099 employee I could, as CEO give them OT, but I'd rather just give my employee's a bump in 401K company matches.

 

Just a heads up....
The no tax on OT only applies to the half part, not the full time and a half!
Some people are going to be disappointed.