An Act amending the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, in personal income tax, further providing for definitions and providing for provisions for overtime pay.

HB 1357 amends Pennsylvania's tax code to allow employees to deduct overtime pay from their taxable income when filing personal income tax returns. The bill defines "overtime pay" as compensation earned for hours worked beyond 40 per week (per federal standards) and requires employers to withhold tax on this amount. Employees who received overtime in 2026 or later can subtract the full overtime amount from their taxable income, potentially resulting in a tax refund if the deduction lowers their liability below zero. This directly affects Pennsylvania employees who earn overtime and employers who withhold taxes on such earnings. The changes apply to tax years beginning January 1, 2026.