No Tax on Overtime Act

Overview: HR 3118, the No Tax on Overtime Act, was introduced in the House on April 30, 2025.

Purpose and Intent: The bill seeks to amend the Internal Revenue Code to exclude overtime pay from an employee's gross income, effectively eliminating the federal income tax on overtime earnings.

Key Provisions:
- Excludes overtime pay from an employee's taxable income
- Applies to all overtime compensation, including time-and-a-half pay and double-time pay
- Retroactively effective for tax years beginning after December 31, 2024

Affected Parties and Impacts: The bill would benefit employees who work overtime by increasing their take-home pay. Employers may also see a reduction in labor costs as the tax burden on overtime pay is eliminated.

Procedural and Timeline Considerations: The bill has been introduced in the House and is currently awaiting further legislative action.