Overtime Wages Tax Relief Act

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 1606 Introduced in Senate (IS)]

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119th CONGRESS
  1st Session
                                S. 1606

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


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 6, 2025

   Mr. Marshall (for himself, Mr. Tuberville, Mr. Ricketts, and Mr. 
   Justice) introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 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 Wages Tax Relief Act''.

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 $10,000 ($20,000 in the case of a joint return) for 
the taxable year.
    ``(b) Limitation.--The amount of the deduction allowable under 
subsection (a) shall be reduced (but not below zero) by $50 for each 
$1,000 (or fraction thereof) by which the taxpayer's modified adjusted 
gross income exceeds $100,000 ($200,000 in the case of a joint return). 
For purposes of the preceding sentence, the term `modified adjusted 
gross income' means adjusted gross income increased by any amount 
excluded from gross income under section 911, 931, or 933.
    ``(c) Overtime Compensation.--For purposes of this section, the 
term `overtime compensation' means compensation that is paid to a 
taxpayer--
            ``(1) at a rate of not less than one and one-half times the 
        regular rate at which the taxpayer is employed, and
            ``(2) for work for a single employer that is in excess of a 
        maximum number of hours of such work for a specified period of 
        time as required pursuant to--
                    ``(A) section 7 of the Fair Labor Standards Act of 
                1938, or
                    ``(B) an agreement that--
                            ``(i) is a collective bargaining agreement 
                        or an agreement or understanding arrived at 
                        between the employer and the employee before 
                        performance of the work, and
                            ``(ii) provides that such maximum number of 
                        hours for a specified period of time is not 
                        less than 40 hours for a 7-day work period.
    ``(d) Regulations.--The Secretary shall provide such regulations or 
other guidance as may be necessary to carry out this section.''.
            (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) Reporting.--Section 6051(a) of the Internal Revenue Code of 
1986 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 overtime compensation as defined 
        in section 224(b).''.
    (e) 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).
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2025.
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