Congress gives workers a tax break on overtime pay
S. 4310 — No Tax on Overtime for All Workers Act · Filed by Jim Justice (R-WV) · 1 cosponsor · Introduced Apr 15, 2026 · Referred to committee
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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 full analysis lists 4 implications of this text.
Who stands to gain
workers earning overtime compensation; workers with contractual overtime agreements