No Tax on Overtime Act

HR 3118, the "No Tax on Overtime Act," creates a new tax deduction for workers who earn overtime pay under the Fair Labor Standards Act (FLSA). It allows taxpayers to deduct up to $100 per 100 hours of overtime (capped at 300 hours yearly) from their taxable income, with a phaseout for higher earners ($100 reduction for every $1,000 over $100,000 AGI). Employers must report overtime amounts on W-2 forms, and taxpayers must include the recipient’s Social Security number to claim the deduction. The deduction applies to tax years beginning after December 31, 2024.