It's been a wild ride for anyone trying to figure out if they’re actually getting paid more for those late-night office grinds. You might remember a lot of noise back in 2019 about overtime, then a whole different set of promises during the 2024 campaign, and now we're in 2026 looking at a reality that’s... honestly, a bit confusing for the average person.
The short answer? Yes, a major "overtime bill" backed by Donald Trump did pass and is currently law, but it probably isn't the kind of "bill" you're thinking of if you're looking for a change in how much your boss has to pay you. Instead, it’s all about how much the government takes from that pay.
The Big One: The "No Tax on Overtime" Law
On July 4, 2025, President Trump signed what he calls the One Big Beautiful Bill (OBBB). This wasn't just a regulation or a memo—it was a massive piece of legislation that actually made it through Congress.
Basically, the headline is this: You can now deduct your overtime pay from your federal income taxes. But like anything involving the IRS, there's a catch. Actually, there are several. It’s not "tax-free" in the sense that your paycheck suddenly looks 50% bigger. It works as a deduction when you file your returns.
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Here is the breakdown of how the OBBB "No Tax on Overtime" works right now in 2026:
- The Cap: You can't just work 100 hours a week and pay zero tax. The deduction is capped at $12,500 for single filers and $25,000 for married couples filing jointly.
- The "Premium" Only: This is where people get tripped up. The law doesn't exempt your entire overtime check. It only applies to the "extra" half. If you make $20 an hour and your overtime rate is $30, only that extra $10 counts toward the deduction.
- Income Limits: If you're a high earner (making over $150,000 single or $300,000 joint), the benefit starts to phase out.
- Payroll Taxes Still Apply: You’re still paying Social Security and Medicare on every cent. This is strictly a federal income tax break.
Wait, What About the 2019 Overtime Rule?
A lot of people asking "did it pass" are actually thinking of the 2019 Department of Labor rule. To be clear, that wasn't a bill in Congress; it was a change in federal regulations.
That rule did go into effect on January 1, 2020. It raised the "salary threshold" for overtime. Before that, if you made more than $23,660 a year, your boss could call you a "manager" and not pay you a dime extra for working 60 hours a week. Trump’s 2019 rule bumped that up to **$35,568**.
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It was a win for about 1.3 million workers, but it was controversial because it was way lower than what the Obama administration had tried to do ($47,476).
The 2024-2025 Tug-of-War
Things got messy when the Biden administration tried to hike that limit even further—up to over $58,000. In late 2024, a judge in Texas basically said "no" and threw that out.
When Trump took office again, his administration didn't fight to save the higher Biden-era limits. Instead, they let the threshold slide back down to that 2019 level ($35,568).
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The result? Millions of workers who were briefly eligible for overtime pay under the 2024 rules suddenly lost that eligibility in early 2025. This created a weird irony: the government passed a law to make overtime tax-free, but at the same time, fewer salaried people were legally "eligible" to earn overtime in the first place.
Is It Working for You?
If you're an hourly worker, you're the big winner here. You were already getting overtime, and now you get a tax break on it.
If you're a salaried "professional" making $45,000 a year, you’re kind of in no-man's-land. Because the salary threshold is stuck at $35,568, your employer isn't legally required to pay you overtime. And if you don't get paid overtime, you can't claim the "No Tax on Overtime" deduction. Kinda stinks, right?
Actionable Next Steps for 2026
If you want to actually see this money, you can't just sit back. Here is what you need to do:
- Check your W-2: Look for Code TT in Box 12. This is the new code for "Qualified Overtime Compensation." If your employer isn't tracking this separately, you won't be able to claim the deduction easily.
- Talk to Payroll: Because the OBBB passed in mid-2025 but applied retroactively to January 1, some companies are still catching up. Ask them if they are using the "reasonable method" allowed by the IRS to estimate your 2025 overtime.
- Adjust your W-4: If you know you're going to have a big deduction coming, you might want to adjust your withholdings now so you get more money in each paycheck rather than waiting for a big refund in 2027.
- Watch the Sunsets: Remember, this "No Tax on Overtime" law isn't permanent. It’s set to expire at the end of 2028 unless Congress votes to keep it.
Honestly, the "overtime bill" did pass, but it’s more of a tax play than a labor law play. It helps the guy at the factory more than the girl in the middle-management cubicle. Whether that’s "fair" depends on who you ask, but for now, if you've got the hours, make sure you're getting the tax credit you're owed.