Workers get federal tax break on overtime pay—capped at 300 hours.
H.R. 3118 — No Tax on Overtime Act · Filed by Nathaniel Moran (R-TX) · Introduced Apr 30, 2025 · Referred to committee
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What it does
This bill allows workers to deduct qualified overtime compensation from their federal income taxes, up to 300 hours of overtime per year, with the deduction phasing out for higher earners (above $100,000 individual / $200,000 joint income). The deduction is available to all workers regardless of whether they itemize deductions, and employers must report overtime compensation on W-2 forms.
Why we flagged it
The bill's sole operative mechanism is a federal income tax deduction for overtime-compensated workers. It is a straightforward tax relief measure targeting a specific income category (overtime pay) and does not contain riders, carve-outs, or hidden provisions.
What the text implies
- Overtime deduction is capped at 300 hours per year, which may not cover all overtime worked by some workers in high-overtime industries (healthcare, manufacturing, emergency services).
- Phaseout structure ($100 reduction per $1,000 over threshold) creates a marginal tax-rate cliff for workers earning $100k–$200k, potentially discouraging overtime work in that income band.
- Requires employers to separately report overtime compensation on W-2 forms, creating new administrative burden and potential for reporting errors.
- Deduction is only available if worker's SSN is included on tax return; missing or incorrect SSN results in loss of entire deduction, creating compliance risk for workers with identity issues or filing errors.
Section numbers refer to the bill text the analysis read — linked under Primary records below.
Who it affects
Ordinary workers who earn overtime pay receive a direct tax reduction on that income, lowering their federal tax liability. The benefit is largest for lower- and middle-income workers (phaseout begins at $100k/$200k) and is available to all workers, not just those who itemize deductions.
Who stands to gain
- Individual workers earning overtime compensation
- Lower- and middle-income households (primary beneficiaries due to phaseout structure)
Named in the bill
Internal Revenue Code of 1986, Fair Labor Standards Act of 1938, Section 7 (FLSA overtime definition), Treasury Department, IRS
Where it stands
- Apr 30, 2025 — Introduced · Congress.gov: “Introduced in House”
- Apr 30, 2025 — Referred to House Committee on Ways and Means · Congress.gov: “Referred to the House Committee on Ways and Means”
Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.
How this was measured
Analysis — Quorum's AI read the bill text published by Congress.gov (3,932 characters) on Jun 3, 2026. Section numbers in the findings refer to that text, linked below; transparency and hidden-provision scores are compared against the median of 16,222 analysed bills.
Status and sponsors — Congress.gov's bill record — actions, committee referrals and cosponsors — loaded nightly. The timeline shows status changes, not every procedural action.
As of — page rendered 2026-10-20.
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