Bill > HR405

This bill, known as the "Keep Every Extra Penny Act of 2025", proposes to amend the Internal Revenue Code to exclude overtime compensation from gross income for tax purposes. Specifically, the bill would add a new section (Section 139J) to the tax code that exempts overtime pay from being counted as taxable income. Overtime compensation is defined by referencing Section 7 of the Fair Labor Standards Act of 1938, which typically requires employers to pay non-exempt employees at least 1.5 times their regular hourly rate for hours worked beyond 40 in a workweek. The tax exemption would apply to overtime amounts received after the date of the bill's enactment, meaning workers would no longer have to pay federal income tax on the additional money they earn for working extra hours. This change aims to provide financial relief to workers who take on additional work hours, effectively increasing their take-home pay by reducing their tax liability on overtime earnings.

Budget and Finance

https://www.congress.gov/bill/119th-congress/house-bill/405/all-info