Deduction for overtime pay
Up to $12,500 of qualified overtime compensation is deductible ($25,000 joint).
JCT line: "Deduction for overtime pay". Peaks at $23.0B in FY2028 then falls to $5.8B in FY2029, consistent with expiry after 2028.
Reaches hourly non-exempt workers broadly, but is unavailable by construction to salaried exempt employees and to anyone whose employer does not report qualifying overtime. As a deduction its value rises with the marginal rate.
Structural reading
The interesting channel here is the second-order one. The overtime premium exists to make employers internalise the cost of long hours; subsidising it on the employee's side softens that pressure, which transfers part of the benefit to the payer rather than the worker. That is a real concentrated benefit sitting inside a provision that presents as broadly pro-worker, and it is exactly the kind of structure this site exists to surface. The classification boundary matters too: the deduction turns on exempt status, so two people doing comparable work can be treated differently by a categorisation decision rather than by anything about the work.
Who gets it
The channels the benefit actually flows through, described by asset position, entity form and form of return. Never by named individuals.
Cost split by the concentration score. That score is a judgement rather than a published figure, so treat this as the scale of the split, not an audited allocation.
- Non-exempt hourly workers with substantial overtime
The benefit is proportional to overtime actually worked and reported, so it concentrates among those in scheduling-intensive roles rather than across wage earners generally.
- Employers, through the wage bargain
Making overtime cheaper after tax for the employee weakens the pressure that the overtime premium is designed to place on employers, which is a benefit to the payer rather than the worker.
- Structural exclusion of salaried exempt staff
Two people doing comparable work receive different treatment based on their exemption classification, which is a matter of job categorisation rather than of hours worked.
Who pays
General taxpayers, including salaried workers who perform unpaid overtime and receive nothing.
This transfer follows a general pattern, asymmetric organisation, sustained expert attention, and scheduled expiry dates.
How rent-seeking works →Legislative history and accountability
Enacting statutes, major amendments, recorded votes with party breakdown, and live reform proposals.
Enabling legislation
- One Big Beautiful Bill ActP.L. 119-21Jul 4, 2025
Created a deduction of up to $12,500 ($25,000 on a joint return) for qualified overtime compensation reported on tax statements furnished to the individual. Enacted through budget reconciliation.
Party-line (Republican)Enacted through budget reconciliation, the procedure that allows passage without minority-party votes. No separate roll call on this provision is recorded here.
Sources and data freshness
Published within the last year. Figures marked unverified are seed estimates that have not been reconciled line-by-line against the primary source document. See the methodology for how each score is constructed.