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House tax draft would end taxation of overtime pay
The headquarters of the Internal Revenue Service in Washington, D.C. (AP)
The House's first draft of tax legislation includes a provision to end taxation of overtime pay, as President Donald Trump promised in 2024.
The provision is included in the 389-page tax bill, which is a starting point for debate in the tax-writing House Ways and Means Committee.
For employees who qualify for overtime pay, the provision would shield from taxes pay beyond 40 hours per week. It excludes employees who are considered by tax law to be "highly compensated," which is generally defined as people who carry out executive, administrative or professional duties in non-manual-labor settings.
Consideration by Ways and Means is the first of many steps required before this becomes law. But it's enough to rate this promise In the Works.
Our Sources
House Ways and Means Committee, draft tax legislation, May 12, 2025
Politico, "House GOP unleashes sweeping tax legislation," May 12, 2025
Labor Department, "Highly-Compensated Employees and the Part 541 Exemption Under the Fair Labor Standards Act (FLSA)," accessed May 12, 2025