Did The Senate Pass The No Tax On Overtime Bill? Latest Updates For 2025

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The No Tax on Overtime Bill comes with a might promise to exempt overtime pay from federal income tax, allowing workers who log extra hours to take home a bigger chunk of their earnings. It's currently proposed as part of a broader $4.5 trillion tax cut package that gained traction in 2024. The idea behind the promising bill is simple: reward hardworking Americans by letting them keep their full overtime wages, potentially boosting economic growth and incentivizing extra hours.

While the bill comes with strong public support, turning it into law requires more than just wading through complex legislative waters.

The House of Representatives passed a budget resolution on February 25, 2025, and this comes with the framework for the no tax on overtime bill. The vote was razor-thin at 217-215. This resolution, often referred to as " big, beautiful bill ," sets the stage for $4.5 trillion in tax cuts over a decade, including the tax exemption on overtime bill. However, it's important to not forget that this budget resolution isn't final law yet. It's still in the form of a blueprint that will guide future legislation.

The House also saw the outline of a related bill, the Overtime Pay Tax Relief Act of 2025 (H.R. 561) , on January 20, 2025. This bill proposes a deduction for overtime compensation, capped at 20% of an individual's regular wages, with income limitations. It's currently under review by the Committee on Ways and Means, adding another layer to the no tax on overtime bill status.