Workers get tax break on overtime pay — first time in decades

What it does

This bill allows workers to deduct overtime compensation from their federal taxable income. Under current law, wages are fully taxable; this bill carves out overtime pay (hours beyond 40 per week, or beyond agreed-upon thresholds for rail and airline workers) as a deduction, reducing the income tax owed by workers who earn overtime.

Why we flagged it

The bill's sole operative mechanism is a tax deduction for overtime wages earned by workers. It is a straightforward tax relief measure targeting wage-earners, not a regulatory change or appropriation.

What the text implies

• The deduction applies retroactively to taxable years beginning after December 31, 2024, meaning workers filing 2025 returns could claim it immediately if enacted.
• The bill covers both FLSA-mandated overtime (federal minimum) and contractually agreed overtime, potentially broadening the benefit beyond statutory minimums.
• Rail and airline workers (covered by Railway Labor Act) receive a separate pathway based on scheduled vs. actual hours, reflecting industry-specific labor practices.
• No income cap or phase-out is specified, meaning high-earning workers with substantial overtime would receive the same deduction benefit as lower-wage workers.

Section numbers refer to the bill text the analysis read — linked under Primary records below.

Who it affects

Ordinary workers who earn overtime pay will owe less federal income tax, putting more money in their pockets. The benefit flows directly to wage-earners, not corporations or intermediaries, and is broadly available to any worker subject to overtime rules.

Who stands to gain

• wage-earning workers (all industries subject to overtime rules)

Named in the bill

Internal Revenue Code of 1986, Fair Labor Standards Act of 1938, Railway Labor Act, U.S. Department of Labor

Where it stands

57 cosponsors: 29 Democrats, 28 Republicans.

• Sep 18, 2025 — Introduced · Congress.gov: “Introduced in House”
• Sep 18, 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

19 lobbying clients named this bill on 25 disclosure filings across 3 quarters, Sep 2025 to Jun 2026. Those filings disclosed $6,856,279 in lobbying spend. A filing names 22 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 96% of bills with at least one filing.

Nicole Malliotakis, the sponsor, reported $1,140,250 in PAC receipts in the 2026 cycle.

• International Association of Machinists and Aerospace Workers — $1,425,000 on 2 filings
• Bnsf Railway Company — $960,000 on 1 filing
• National Restaurant Association — $790,000 on 1 filing
• Int'l Ass'n of Sheet Metal Air Rail & Transp Workers Transp Div — $743,827 on 2 filings
• Csx Corporation — $561,005 on 2 filings

Lobbying Disclosure Act filings through Jul 22, 2026. A filing shows who paid to lobby on a bill it names, not what changed.