US Federal 2025-2026 Regular Session

US Federal House Bill HB561

Introduced
1/20/25  

Caption

Overtime Pay Tax Relief Act of 2025This bill allows a tax deduction for overtime compensation received by an individual, subject to income limitations, through 2029. The amount of the deduction may not exceed 20% of the individual’s regular wages from the same employer. Further, the deduction is not allowed for an individual with adjusted gross income exceeding $100,000 (or $150,000 for a head of the household and $200,000 for a married couple filing a joint return).  

Impact

If enacted, HB 561 would amend the Internal Revenue Code to establish clear guidelines for claiming such deductions. The introduction of this deduction could lead to changes in tax filings for eligible individuals and may incentivize companies to offer more overtime opportunities. Moreover, the bill sets income thresholds that restrict eligibility, allowing only those below $200,000 for joint filers, $150,000 for heads of household, and $100,000 for individual taxpayers to benefit from this tax relief.

Summary

House Bill 561, titled the "Overtime Pay Tax Relief Act of 2025", aims to introduce a tax deduction for certain overtime compensation received by employees. This bill proposes that individuals can claim a deduction equivalent to 20% of their overtime pay, as long as the overtime compensation does not exceed this threshold in relation to their regular wages. The legislation seeks to alleviate financial burdens on workers who regularly earn overtime pay while offering incentives to employers to maintain fair compensation practices.

Contention

Notably, there may be points of contention surrounding the bill regarding its fiscal implications and the potential for it to disproportionately benefit higher-income earners who may more frequently exceed the defined limits. Critics may argue that the income caps do not adequately reflect the needs of lower-income workers who rely significantly on overtime pay. Additionally, concerns may arise about how the bill fits within the broader context of labor regulations and whether it provides enough support for employees affected by fluctuating work hours due to shifts in economic conditions.

Congress_id

119-HR-561

Policy_area

Taxation

Introduced_date

2025-01-20

Companion Bills

No companion bills found.

Previously Filed As

US HB557

Working Class Bonus Tax Relief Act of 2025This bill allows a tax deduction for bonuses received by an individual, subject to income limitations, through 2029. The amount of the deduction may not exceed 15% of the individual’s regular wages from the same employer. Further, the deduction is not allowed for individuals with annual adjusted gross income exceeding $100,000 (or $150,000 for heads of the household and $200,000 for married couples filing a joint return).  

US HB559

Seniors in the Workforce Tax Relief ActThis bill establishes a new above-the-line federal tax deduction through 2029 for individuals who attain the age of 65 before the end of the tax year. (Above-the-line deductions are subtracted from gross income to calculate adjusted gross income.)Under the bill, the amount of the tax deduction is $25,000 for individuals (or $50,000 for joint filers and surviving spouses) and begins to phase out for individuals with an adjusted gross income over $100,000 (or $200,000 for joint filers and surviving spouses). 

US SB0125

Individual income tax: deductions; deduct overtime compensation from taxable income; provide for. Amends secs. 30, 701, 703 & 711 of 1967 PA 281 (MCL 206.30 et seq.).

US HB246

SALT Fairness for Working Families ActThis bill increases the limitation on the federal tax deduction for state and local taxes (commonly known as the SALT deduction cap) to $15,000 ($30,000 for married individuals filing a joint federal income tax return). Under current law, the SALT deduction cap is $10,000 ($5,000 for a married individuals filing separate federal income tax returns).

US HB860

Authorizes income tax deductions for employee compensation received as overtime pay or tips

US HB320

Make Marriage Great Again Act of 2025This bill modifies the federal income tax rate brackets for married individuals filing joint federal income tax returns so that they are twice the amount of the federal income tax rate brackets for unmarried individuals filing federal income tax returns (thus eliminating the tax effect commonly known as the marriage penalty). Further, under the bill, the federal income tax rate brackets for married individuals filing separate federal income tax returns no longer applies for tax years beginning after December 31, 2024.

US HF3524

Federal individual income tax deduction for qualified overtime compensation adopted.

US HB527

Individual income taxes; deduction for qualified overtime income established.

US HB11

This bill provides a tax deduction for health insurance premiums paid to provide medical insurance coverage for an individual, the individual’s spouse, and the individual’s dependents. Under the bill, the tax deduction may be claimed as an adjustment to income (also known as an above-the-line tax deduction), which does not require the individual to itemize deductions. 

US AB1550

Personal income taxes: deductions: tips: overtime compensation.

Similar Bills

No similar bills found.