No Tax on Overtime for All Workers Act
- Bill Number
- S. 4310
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 2
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-04-15: Read twice and referred to the Committee on Finance.
- Last Updated
- 2026-06-11T03:21:23Z
AI-Generated Summary
No Tax on Overtime for All Workers Act (S. 4310)
Purpose
This bill aims to let workers deduct certain overtime pay from their federal taxable income, effectively making qualified overtime compensation tax-free at the federal level.
Key Provisions
- Deduction for Qualified Overtime: Amends Section 225 of the Internal Revenue Code (IRC) to define "qualified overtime compensation" as pay above an employee's regular rate that meets specific criteria.
- Type A: Overtime required by the Fair Labor Standards Act (FLSA, the main U.S. wage law) for hours over 40 in a workweek, paid at a premium rate (typically 1.5 times regular pay).
- Type B: Premium pay (above regular rate) under a pre-work agreement between the employee (or their union) and a single employer, where:
- Work exceeds a standard threshold (at least 40 hours per 7-day period), or
- For workers and employers covered by the Railway Labor Act (RLA, which governs labor disputes in railroads and airlines), work exceeds scheduled/anticipated hours or a maximum set by agreement.
- Effective Date: Applies to tax years starting after December 31, 2024.
Significant Changes to Existing Law
- Expands the IRC's definition of deductible overtime beyond just FLSA-mandated overtime to include contractually agreed premium pay (e.g., union contracts or RLA-covered sectors like railroads and airlines).
- Previously, Section 225(c)(1) likely had a narrower scope; this rewrite broadens eligibility without altering the core deduction mechanism.
Potential Impacts
- Citizens/Workers: Increases take-home pay for overtime earners by reducing federal income taxes on that portion, potentially encouraging more overtime work.
- Government Agencies: IRS and Treasury Department face reduced tax revenue (exact amount unspecified); may need updated forms and guidance for claiming the deduction.
- No notable international relations impacts.
Main Stakeholders Affected
- Workers: Hourly, unionized, and RLA-covered employees (e.g., railroad, airline crews) who receive premium overtime pay.
- Employers: Businesses with overtime agreements, who may see indirect benefits from happier/more productive workers.
- Government: IRS (administration/enforcement) and U.S. Treasury (revenue loss).
- Labor Unions: Gain leverage in negotiating overtime premiums.
Notable Legal, Constitutional, or Political Implications
- Legal: Ensures compatibility with FLSA (wage-hour rules) and RLA (industry-specific labor rules); deduction is an "above-the-line" adjustment (reduces adjusted gross income directly).
- Constitutional: No apparent issues; standard tax policy change via Congress's taxing power.
- Political: Introduced by Sen. Justice (R-WV) in April 2026; referred to Senate Finance Committee; promotes worker incentives amid debates on wages and taxes.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (1)
Recent Actions
- 2026-04-15: Read twice and referred to the Committee on Finance.
- 2026-04-15: Introduced in Senate
Bill Versions
- No Tax on Overtime for All Workers Act — issued 2026-04-15 — PDF (3 pages)