Bill > S1606

This bill proposes to create a new tax deduction for overtime compensation for workers, allowing individuals to deduct up to $10,000 ($20,000 for joint tax returns) of overtime pay from their taxable income. The deduction would apply to overtime wages paid at a rate of at least 1.5 times the regular pay rate, for work exceeding 40 hours in a 7-day period, as defined by the Fair Labor Standards Act or through a collective bargaining agreement. The deduction begins to phase out for taxpayers with modified adjusted gross incomes over $100,000 ($200,000 for joint returns), reducing by $50 for each $1,000 of income above that threshold. The bill requires employers to report total overtime compensation and modifies tax withholding procedures accordingly. These changes would take effect for tax years beginning after December 31, 2025, providing a potential tax benefit for workers who earn overtime pay by incentivizing and providing financial relief for extra hours worked beyond standard work weeks.

Budget and Finance

https://www.congress.gov/bill/119th-congress/senate-bill/1606/all-info