Congress gives workers a tax break on overtime pay

What it does

This bill allows workers to deduct overtime compensation from their taxable income. It creates a tax deduction for overtime pay earned under the Fair Labor Standards Act (the federal minimum wage and overtime law) or under private agreements with employers, effective for tax years starting after December 31, 2024. The deduction applies to compensation paid at rates above the worker's regular hourly rate.

Why we flagged it

The bill's sole operative mechanism is a tax deduction for overtime compensation paid to workers. It is a straightforward tax relief measure targeting a specific income category (overtime pay) and does not create new regulatory obligations, subsidies, or carve-outs for private entities.

What the text implies

• The deduction may incentivize employers to structure compensation as overtime (above regular rate) rather than base wages, since workers will receive a tax benefit; this could shift the composition of worker pay without changing total compensation.
• The deduction applies to both FLSA-covered overtime and contractually agreed overtime, meaning workers in non-FLSA-covered roles (e.g., salaried professionals, independent contractors) may qualify if they have written agreements specifying overtime rates.
• The deduction reduces federal tax revenue; the fiscal cost depends on the volume of overtime compensation claimed and the marginal tax rates of claiming workers, which is not quantified in the bill.
• Workers in lower tax brackets will receive smaller absolute tax savings than higher-earners claiming the same overtime hours, creating a regressive benefit structure within the working population.

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, increasing their take-home pay. The deduction is available to all workers meeting the statutory criteria (FLSA-covered overtime or contractual overtime agreements), with no income cap or phase-out, making it broadly accessible to working people.

Who stands to gain

• workers earning overtime compensation
• workers with contractual overtime agreements

Named in the bill

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

Where it stands

1 cosponsor: 1 Democrats.

• Apr 15, 2026 — Introduced · Congress.gov: “Introduced in Senate”
• Apr 15, 2026 — 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

4 lobbying clients named this bill on 4 disclosure filings across 1 quarter, Jun 2026 to Jun 2026. Those filings disclosed $995,143 in lobbying spend. A filing names 54 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 72% of bills with at least one filing.

Jim Justice, the sponsor, reported $34,750 in PAC receipts in the 2026 cycle.

• International Brotherhood of Teamsters — $489,143 on 1 filing
• Csx Corporation — $310,000 on 1 filing
• International Association of Fire Fighters — $196,000 on 1 filing
• Brotherhood of Maintenance of Way Employes Division Ibt — $0 on 1 filing

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