The Fair Labor Standards Act says that employees must be paid at least 1.5 times their regular rate for overtime hours.

However, there have been talks about Trump getting rid of overtime tax if he becomes the president.

This article will talk about Trump’s proposal on tax cuts, specifically on overtime pay.

Is overtime pay taxed?

Yes, overtime pay is taxed just like your regular hourly or salaried income. Many people mistakenly believe that overtime is taxed more heavily, but this is a common misconception. The confusion usually comes from seeing a larger amount of tax withheld on paychecks that include overtime hours. In reality, overtime earnings are subject to the same federal income tax rules as your regular wages.

Overtime pay can increase your total earnings for a given pay period, which may cause a higher percentage of taxes to be withheld temporarily. However, this does not mean that overtime is taxed at a higher rate. Your overall tax rate is determined by your total annual income and the federal tax bracket you fall into. So while your paycheck may look like it’s being taxed more when you work extra hours, the actual tax rate applied to that income is the same as the rest of your taxable wages.

It’s important to remember that both regular and overtime pay are combined when calculating your yearly taxable income. Therefore, the more overtime you work, the more likely your total income may shift into a higher tax bracket—but that only affects the income above that threshold, not all your earnings.

If you’re wondering “is overtime taxed more?”—the answer is no. Overtime is taxed equally under the current IRS guidelines.

Is Trump getting rid of overtime tax?

Technically, the term “overtime tax” is misleading because overtime is just taxed the same way regular tax is. A more accurate way of saying this would be that Trump proposed to cut taxes from overtime pay.

During Donald Trump’s presidential campaign, Trump promised a $4.5 trillion tax cut package that involves removing taxes from tips, Social Security, and overtime pay.

When does no tax on overtime start?

As of now, there is no confirmed date on when the “no tax on overtime” policy would officially begin.

While former President Donald Trump mentioned the idea during his 2024 presidential campaign, there is currently no legislation or finalized plan that outlines the removal of taxes on overtime pay.

Many people are asking, “Did Trump sign no tax on overtime?” or “Is Trump getting rid of overtime tax?”—but at this point, the proposal remains a campaign promise rather than a formal policy.
Additionally, there is no specific language in the current House budget plan that includes a provision to eliminate federal taxes on overtime wages.

It’s important to note that, under current IRS guidelines, overtime is taxed just like regular income.

This leads to the common misconception that overtime is taxed more, when in reality, it simply pushes earnings into a higher tax bracket.
Until further details are released or legislation is passed, the question of when does no tax on overtime start remains unanswered.

What does this mean for us?

If the “no tax on overtime” proposal is passed into law, then we will be seeing its effects across different industries.

For one, we will be seeing employees putting in more overtime hours since they can now earn more from doing overtime.

In relation to that, employers will now have to come up with or improve overtime policies since there is a possibility of employees requesting to do overtime even if they don’t need to.

Is no overtime tax a good thing?

Realistically speaking, there are a lot of considerations to make when deciding if no tax on overtime is a good thing.

As mentioned, this will have an impact on not just employees, but also the employers.

Some of the possible effects could be the following:

• Widens inequality: Encourages long work hours, disadvantaging those unable to do so due to personal or health constraints
• Lowers wages: Puts downward pressure on standard pay by shifting focus from base compensation.
• Enables tax avoidance: Creates loopholes that high earners can exploit, reducing public revenue and complicating the tax system.

Frequently Asked Questions

What is the deadline for filing federal income tax forms?

The deadline for filing federal income tax forms for the 2024 tax season is on April 15, 2025.

How do I ask for a tax filing extension?

If you need more time to file your taxes, submit Form 4868 by the tax deadline.

Is overtime taxed more?

No, overtime pay is taxed the same way as regular pay. Initially, the taxes withheld may appear higher if you do overtime, but this is only because your paycheck for that period is also higher.

Why does it seem like overtime is taxed more?

It may seem like your overtime pay is taxed more because you receive a higher paycheck during those periods, which can bump a portion of your income into a higher tax bracket. But the tax rates themselves do not change just because the hours are overtime.

Can I reduce the tax on my overtime pay?

The best way to manage taxes on overtime is through proper withholding. You can adjust your W-4 form or consult with a tax advisor to ensure the right amount is withheld throughout the year.

Will overtime pay affect my tax refund?

Yes, if too much tax is withheld from your overtime pay, you may receive a larger tax refund. On the other hand, if not enough is withheld, you could owe money when you file.