Bill > HB1357

This bill modifies the Pennsylvania Tax Reform Code to provide specific definitions and tax treatments for overtime pay. The bill adds "overtime pay" to the definition of compensation for tax purposes, defining overtime pay as salaries or wages paid for work officially ordered or approved beyond 40 hours per week or 8 hours per day, referencing federal overtime regulations. The bill introduces new provisions requiring employers to withhold taxes on all hours worked, including overtime hours, and prohibits employers from reducing or denying overtime hours solely because of tax withholding. Most significantly, the bill allows taxpayers who receive overtime pay to deduct the full amount of their overtime earnings from their taxable income, with any resulting negative tax liability to be refunded by the state department. This provision aims to provide a financial benefit to workers who earn overtime, effectively creating a tax incentive for overtime work. The changes will apply to taxable years beginning on or after December 31, 2025, and the act takes effect immediately upon passage. The bill includes a potential fine of $2,000 for employers who violate the overtime availability provisions.

Budget and Finance

https://www.legis.state.pa.us/cfdocs/billinfo/bill_history.cfm?syear=2025&sind=0&body=H&type=B&bn=1357