Congress gives overtime workers a tax break—but leaves gig workers out
S. 1606 — Overtime Wages Tax Relief Act · Filed by Roger Marshall (R-KS) · 3 cosponsors · Introduced May 6, 2025 · Referred to committee
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What it does
This bill creates a new federal income tax deduction for overtime wages. Workers earning overtime pay can deduct up to $10,000 (or $20,000 on joint returns) from their taxable income each year, reducing their federal tax liability. The deduction phases out for higher earners (starting at $100,000 modified AGI for individuals, $200,000 for joint filers), and applies only to overtime compensation as defined by the Fair Labor Standards Act or qualifying collective bargaining agreements.
Why we flagged it
The bill's sole operative mechanism is a new federal income tax deduction targeted at workers earning overtime compensation. It is a straightforward tax expenditure (revenue reduction) with no regulatory, subsidy, or immunity components.
What the text implies
- The deduction applies only to overtime meeting FLSA or collective bargaining standards, potentially excluding gig workers, independent contractors, and workers in non-covered sectors (e.g., certain agricultural, domestic, or executive roles).
- Phaseout structure (reducing $50 per $1,000 over threshold) creates a marginal tax-rate cliff for workers near the income threshold, potentially discouraging overtime work or income growth in that band.
- Employers are required to report overtime compensation separately (new Form reporting requirement), creating administrative burden on payroll systems but enabling IRS verification.
- The deduction does not apply to self-employment income or 1099 contractors, limiting benefit to W-2 employees only.
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, lowering their federal tax burden. The deduction is structured to benefit middle-income overtime workers most (it phases out at higher incomes), and does not create new restrictions on worker rights or remedies. The public bears a revenue cost, but the primary effect is a tax relief for a broad class of working people.
Who stands to gain
- W-2 employees earning overtime compensation
- Workers in industries with high overtime prevalence (manufacturing, transportation, healthcare, cons
Named in the bill
Internal Revenue Code, Fair Labor Standards Act of 1938, Secretary of the Treasury, IRS
Where it stands
3 cosponsors: 3 Republicans.
- May 6, 2025 — Introduced · Congress.gov: “Introduced in Senate”
- May 6, 2025 — Referred to Senate Committee on Finance · Congress.gov: “Read twice and referred to the Committee on Finance”
Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.
Money around this bill
2 lobbying clients named this bill on 4 disclosure filings across 2 quarters, Dec 2025 to Jun 2026. Those filings disclosed $460,304 in lobbying spend. A filing names 38 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 41% of bills with at least one filing.
Roger Marshall, the sponsor, reported $1,777,391 in PAC receipts in the 2026 cycle.
- International Association of Fire Fighters — $380,304 on 2 filings
- Sixteen Thirty Fund — $80,000 on 2 filings
Lobbying Disclosure Act filings through Jul 20, 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 (3,556 characters) on Jul 25, 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 Dec 2025 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 20, 2026 · page rendered 2026-10-20.
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