No tax on overtime

(a) Deduction allowed Part VII of subchapter B of chapter 1, as amended by the preceding provisions of this Act, is amended by redesignating section 225 as section 226 and by inserting after section 224 the following new section: 225. Qualified overtime compensation (a) In general There shall be allowed as a deduction an amount equal to the qualified overtime compensation received during the taxable year. (b) Qualified overtime compensation (1) In general For purposes of this section, the term qualified overtime compensation means overtime compensation paid to an individual required under section 7 of the Fair Labor Standards Act of 1938 that is in excess of the regular rate (as used in such section) at which such individual is employed. (2) Exclusions Such term shall not include— (A) any qualified tip (as defined in section 224(c)), or (B) any amount received by an individual during a taxable year if such individual is a highly compensated employee (as defined in section 414(q)(1)) of any employer for the calendar year in which the taxable year begins, or receives earned income in excess of the dollar amount in effect under section 414(q)(1)(B)(i) for such calendar year. (c) Social security number required (1) In general No deduction shall be allowed under this section unless the taxpayer includes on the return of tax for the taxable year— (A) such individual’s social security number, and (B) if the individual is married, the social security number of such individual’s spouse. (2) Married individuals Rules similar to the rules of section 32(d) shall apply to this section. (3) Social security number defined For purposes of paragraph (1), the term social security number shall have the meaning given such term in section 24(h)(7). (d) Regulations The Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section. (e) Termination No deduction shall be allowed under this section for any taxable year beginning after December 31, 2028.. (b) Deduction allowed to non-itemizers Section 63(b), as amended by the preceding provisions of this Act, is amended by striking and at the end of paragraph (4), by striking the period at the end of paragraph (5) and inserting and, and by adding at the end the following new paragraph: (6) the deduction provided in section 225.. (c) Requirement to include overtime compensation on W-2 Section 6051(a), as amended by the preceding provision of this Act, is amended by striking and at the end of paragraph (17), by striking the period at the end of paragraph (18) and inserting, and, and by inserting after paragraph (18) the following new paragraph: (19) the total amount of qualified overtime compensation (as defined in section 225(b)).. (d) Omission of correct social security number treated as mathematical or clerical error Section 6213(g)(2), as amended by the preceding provisions of this Act, is amended by striking and at the end of subparagraph (W), by striking the period at the end of subparagraph (X) and inserting, and, and by inserting after subparagraph (X) the following new subparagraph: (Y) an omission of a correct social security number required under section 225(c) (relating to deduction for qualified overtime).. (e) Clerical amendment The table of sections for part VII of subchapter B of chapter 1, as amended by the preceding provisions of this Act, is amended by redesignating the item relating to section 225 as an item relating to section 226 and by inserting after the item relating to section 224 the following new item: Sec. 225. Qualified overtime compensation.. (f) Withholding The Secretary of the Treasury (or the Secretary’s delegate) shall modify the tables and procedures prescribed under section 3402(a) to take into account the deduction allowed under section 225 (as added by this Act). (g) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2024.

(a) Deduction allowed Part VII of subchapter B of chapter 1, as amended by the preceding provisions of this Act, is amended by redesignating section 225 as section 226 and by inserting after section 224 the following new section: 225. Qualified overtime compensation (a) In general There shall be allowed as a deduction an amount equal to the qualified overtime compensation received during the taxable year. (b) Qualified overtime compensation (1) In general For purposes of this section, the term qualified overtime compensation means overtime compensation paid to an individual required under section 7 of the Fair Labor Standards Act of 1938 that is in excess of the regular rate (as used in such section) at which such individual is employed. (2) Exclusions Such term shall not include— (A) any qualified tip (as defined in section 224(c)), or (B) any amount received by an individual during a taxable year if such individual is a highly compensated employee (as defined in section 414(q)(1)) of any employer for the calendar year in which the taxable year begins, or receives earned income in excess of the dollar amount in effect under section 414(q)(1)(B)(i) for such calendar year. (c) Social security number required (1) In general No deduction shall be allowed under this section unless the taxpayer includes on the return of tax for the taxable year— (A) such individual’s social security number, and (B) if the individual is married, the social security number of such individual’s spouse. (2) Married individuals Rules similar to the rules of section 32(d) shall apply to this section. (3) Social security number defined For purposes of paragraph (1), the term social security number shall have the meaning given such term in section 24(h)(7). (d) Regulations The Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section. (e) Termination No deduction shall be allowed under this section for any taxable year beginning after December 31, 2028.. (b) Deduction allowed to non-itemizers Section 63(b), as amended by the preceding provisions of this Act, is amended by striking and at the end of paragraph (4), by striking the period at the end of paragraph (5) and inserting and, and by adding at the end the following new paragraph: (6) the deduction provided in section 225.. (c) Requirement to include overtime compensation on W-2 Section 6051(a), as amended by the preceding provision of this Act, is amended by striking and at the end of paragraph (17), by striking the period at the end of paragraph (18) and inserting, and, and by inserting after paragraph (18) the following new paragraph: (19) the total amount of qualified overtime compensation (as defined in section 225(b)).. (d) Omission of correct social security number treated as mathematical or clerical error Section 6213(g)(2), as amended by the preceding provisions of this Act, is amended by striking and at the end of subparagraph (W), by striking the period at the end of subparagraph (X) and inserting, and, and by inserting after subparagraph (X) the following new subparagraph: (Y) an omission of a correct social security number required under section 225(c) (relating to deduction for qualified overtime).. (e) Clerical amendment The table of sections for part VII of subchapter B of chapter 1, as amended by the preceding provisions of this Act, is amended by redesignating the item relating to section 225 as an item relating to section 226 and by inserting after the item relating to section 224 the following new item: Sec. 225. Qualified overtime compensation.. (f) Withholding The Secretary of the Treasury (or the Secretary’s delegate) shall modify the tables and procedures prescribed under section 3402(a) to take into account the deduction allowed under section 225 (as added by this Act). (g) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2024.