Question 1

What is the "No Tax on Overtime" proposal?

Accepted Answer

The "No Tax on Overtime" proposal, supported during the 2024 presidential campaign, would exempt overtime pay from federal income tax. Under current law, overtime wages (hours worked beyond 40 per week) are taxed as ordinary income at your marginal rate. If passed, only the overtime portion of your wages would be tax-free -- your regular wages would still be taxed normally. As of 2025, this has not yet been enacted into law.

Question 2

How much would I save with no tax on overtime?

Accepted Answer

Your savings depend on your tax bracket and how much overtime you work. For example, if you earn $25/hour, work 10 hours of overtime per week, and are in the 22% tax bracket, your weekly overtime pay is $375 (1.5x rate). Currently you pay $82.50 in federal income tax on that. With no tax on overtime, you keep the full $375 -- saving $82.50/week or about $4,290/year (52 weeks).

Question 3

Does no tax on overtime apply to Social Security and Medicare taxes?

Accepted Answer

The current proposals generally focus on federal income tax only. Social Security (6.2%) and Medicare (1.45%) payroll taxes -- collectively called FICA -- would likely still apply to overtime wages under most versions of the proposal. Some versions have proposed exempting overtime from FICA as well, but this is less common. This calculator lets you choose whether to include or exclude FICA from the overtime exemption.

Question 4

Who qualifies for overtime pay?

Accepted Answer

Under the Fair Labor Standards Act (FLSA), non-exempt employees must receive overtime pay at 1.5x their regular rate for hours worked beyond 40 in a workweek. Most hourly workers qualify. Salaried employees earning less than $684/week ($35,568/year) also qualify. Exempt employees (executives, professionals, administrative workers earning above the threshold) do not receive FLSA overtime protections, though some employers pay overtime voluntarily.

Question 5

When will no tax on overtime take effect?

Accepted Answer

As of early 2025, no legislation has been signed into law. The proposal was a campaign promise and has been discussed in Congress, but has not passed. If enacted, it would likely take effect at the start of a tax year (January 1) following passage. Check the latest news for updates on the status of this legislation.

No Tax on Overtime Calculator 2025

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