(NEXSTAR) — The House
passed the “Single Grand Spectacular Bill Act”
— a comprehensive legislative bundle encompassing tax reductions, expenditure decreases, financing for border protection, and other key points of President Donald Trump’s policy goals — was forwarded to the Senate earlier this week after being approved last week.
One aspect of the bill that could affect you, if passed as currently written, involves changes to overtime pay regulations.
This is an allowance that Trump ran his campaign with along with tax breaks for tips, but what effect will it have on you?
According to the
House Committee on Ways andMeans
The measure eliminates income taxes on the extra pay for overtime work for more than 80 million hourly employees.
This is not a permanent change, however; it’s a temporary full deduction from your overtime pay, according to Nexstar’s The Hill.
explains
The deduction is scheduled to conclude after 2027, unless it gets extended prior to that date.
Since this involves a deduction, you won’t notice an instant change in your salary. Rather, you’d report the overtime earnings when filing your taxes for the next year.
Along with other components of the “One Huge Stunning Bill Act,” such as the
boosted child tax credit
,
no tax on tips
, and
an enhanced standard deduction
The Ways andMeans Committee estimates that taxpayers might see savings ranging from hundreds to thousands of dollars.
qualifying for overtime compensation differs across various sectors.
For numerous individuals, overtime might start accumulating after working 40 hours. However, this limit could be different for some people. As an illustration, firefighters must put in 53 hours per week before they become eligible for overtime pay, according to a statement from Edward Kelly, who serves as the general president of the International Association of Fire Fighters, which was acquired by us.
NBC News
.
The
Tax Foundation
mentioned earlier this past year that removing overtime pay from income tax considerations, which was part of Trump’s election pledges, might motivate more workers to opt for additional overtime shifts. Conversely, it could also lead employers to become more stringent in managing overtime demands so they can keep overall payroll expenses down.
The
Congressional Budget Office
cautioned that excluding overtime compensation from income taxation might result in $124 billion of lost tax revenue.
It’s premature to determine if the overtime tax reductions will stay within the legislation. Prior to the House approving President Trump’s budget proposal, the Senate had acted with unanimous consent.
passed legislation to remove federal taxation on gratuities
It did not include identical provisions for overtime pay, and there isn’t presently any legislation in the Senate addressing overtime compensation.
Conservatives in the upper chamber of Congress have also
expressed frustration
Over the “large, impressive bill,” stating it requires more substantial reductions.
The Associated Press provided contributions to this report.
Copyright 2025 Nexstar Media, Inc. All rights reserved. This content must not be republished, distributed, broadcasted, or rewritten without permission.
To get the most recent updates on news, weather, sports, and live videos, visit WGN-TV.
