Workers get tax break on overtime pay under new bill
H.R. 405 — Keep Every Extra Penny Act of 2025 · Filed by Russ Fulcher (R-ID) · 1 cosponsor · Introduced Jan 15, 2025 · Referred to committee
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What it does
This bill amends the tax code to exclude overtime pay from federal income tax. Workers who earn overtime compensation under the Fair Labor Standards Act would no longer owe federal income tax on those overtime earnings, effectively giving them a tax break on hours worked beyond the standard 40-hour week.
Why we flagged it
The bill's sole operative mechanism is a direct tax exclusion benefiting workers who earn overtime pay. It is a straightforward tax relief measure with no hidden provisions or narrow carve-outs.
What the text implies
- The exclusion applies only to overtime 'required under section 7 of the Fair Labor Standards Act' — voluntary overtime or overtime under other statutory regimes may not qualify, creating potential ambiguity in application.
- The bill does not address state income tax treatment of overtime; workers in high-tax states may still owe state tax on the same earnings, limiting the practical benefit in some jurisdictions.
- Federal revenue loss from this exclusion is not quantified in the bill; the fiscal impact depends on aggregate overtime earnings across the workforce and is not disclosed.
Section numbers refer to the bill text the analysis read — linked under Primary records below.
Who it affects
Ordinary workers, particularly hourly employees who earn overtime, directly benefit by retaining more of their earnings. The tax exclusion reduces their federal income tax liability on overtime compensation, putting more money in workers' pockets with no offsetting cost to the general public.
Who stands to gain
- hourly wage workers earning overtime compensation
- workers in industries with high overtime prevalence (manufacturing, healthcare, transportation, hosp
Named in the bill
Internal Revenue Code of 1986, Fair Labor Standards Act of 1938, IRC § 139J (new section), House Committee on Ways and Means
Where it stands
1 cosponsor: 1 Republicans.
- Jan 15, 2025 — Introduced · Congress.gov: “Introduced in House”
- Jan 15, 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.
Money around this bill
1 lobbying clients named this bill on 1 disclosure filings across 1 quarter, Jun 2026 to Jun 2026. Those filings disclosed $100,000 in lobbying spend. A filing names 25 bills on average, so that figure is what each filing reported, not a share belonging to this bill.
More lobbying clients named this bill than 0% of bills with at least one filing.
Russ Fulcher, the sponsor, reported $350,070 in PAC receipts in the 2026 cycle.
- National Fraternal Order of Police — $100,000 on 1 filing
Lobbying Disclosure Act filings through Jul 24, 2026. A filing shows who paid to lobby on a bill it names, not what changed.
How this was measured
Analysis — Quorum's AI read the bill text published by Congress.gov (798 characters) on Oct 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.
Money — Senate Lobbying Disclosure Act filings whose specific-issue field names this bill for quarters ending Jun 2026 to Jun 2026. A filing's amount is reported whole beside the median number of bills a filing names; it is never divided across them. PAC receipts are FEC-reported contributions to the sponsor's candidate committee in the 2026 cycle.
As of — lobbying records through Jul 24, 2026 · page rendered 2026-10-20.
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