Millions of Americans could soon see bigger paychecks thanks to the new “no tax on overtime” policy. This unusual tax break focuses on extra hours worked, making waves for its potential to boost take-home pay after years of wage stagnation.

But the changes aren’t just exciting for employees. Employers are already adapting their overtime and payroll strategies now that the law is in effect.

Here’s what the law actually does, how much you could save, and what fine print to watch for.

What Is “No Tax on Overtime”?

According to Congress.gov, H.R. 561, the Overtime Pay Tax Relief Act of 2025, was introduced on January 20, 2025, by Rep. Don Bacon. The bill proposes amending the Internal Revenue Code to allow workers to deduct certain overtime compensation through 2029, if enacted. It was ref

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