Overtime Pay Tax Relief Act of 2025

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 561 Introduced in House (IH)]

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119th CONGRESS
  1st Session
                                H. R. 561

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


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 20, 2025

  Mr. Bacon introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


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

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Overtime Pay Tax Relief Act of 
2025''.

SEC. 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:

``SEC. 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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