Info Report On The Overtime Pay Tax Relief Act Bill

The Overtime Pay Tax Relief Act seeks to make overtime compensation tax-deductible for workers, allowing up to 20% of eligible overtime earnings to be excluded from taxable income and phasing out benefits at higher income levels. By increasing take-home pay and incentivizing additional hours, the bill aims to support workers during ongoing labor shortages and stimulate bottom-up economic growth. However, the legislation introduces concerns about federal revenue loss, tax-code complexity, and potential inequities between workers with similar annual earnings but different wage structures. To strengthen equity and sustainability, the article recommends adopting a graduated deduction and implementing safeguards to prevent wage distortion and misclassification.