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No tax on overtime!*

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Jimmy Higgins

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Great news everyone! Thanks to the bill the GOP passed, there is no long tax on overtime.*

* - Well....

If you make time and a half on overtime... the "no taxes" is only on the "half".

Yes, you are connecting the next dot. So if you don't get time and a half, and just straight overtime pay... you don't see a drop in taxes at all.

article said:
Another issue, raised by Forbes, is horizontal equity: two people with the same annual pay can end up taxed differently. An hourly worker who logs FLSA overtime can deduct part of that overtime, while a salaried worker putting in the same extra hours gets no break.
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Yup... enjoy life the Trump asterisk.
 
This is what I shared on a board which is invite only and run by my bank:

Those who can claim the deduction for no tax on OT: the IRS announced that employers will not have to report this amount on your 2025 W-2 form. You will need to keep your own records for this. The best proof would be paystubs showing regular & OT hours and rates.

Remember, only the OT part of the pay is not taxed; that is the excess amount over your regular pay rate (for example, regular pay is $20/hr., OT is $30/hr. You will not owe income tax on only the $10 extra). Also this only applies to OT paid for hours in excess of 40 per week.

This means that union and other contract covered workers who are paid OT for working outside standard hours will not be eligible to deduct OT pay unless those hours are over the 40 hours per week.

Double time overtime pay is also not fully deductible, as the only thing mandated by Section 7 of the Fair Labor Standards Act is time and a half for overtime pay. Only the difference between regular and time and a half for over 40 hours per week will be deductible.

So here is the bottom line on overtime pay deductions:

1. Your base wage is $20 per hour and $30 per hour for overtime pay. You work 45 hours in a week and are paid overtime pay for 5 hours. You can deduct $50 from your taxable earnings on your tax return ($10 per hour overtime portion x 5 hours worked over 40 hours in a week).

2. You are a union worker with a base wage of $20 per hour and $30 per hour for overtime pay. You work 40 hours one week but receive overtime pay for 8 hours because it was overnight work. You have to pay taxes on all of your pay with no deductions for the overtime pay.

3. You work under a contract that specifies double time pay for certain work. Your base wage is $20 per hour, $30 per hour for overtime, and $40 per hour for weekend work. You work 48 hours one week including 8 hours double time pay for working on Saturday. You can deduct $80 from your taxable earnings on your tax return ($10 per hour difference between regular and overtime pay x 8 hours worked over 40 hours).
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So yes, you are right that this is very discriminatory. It is also going to be a nightmare for accounting purposes when employers have to report "qualified" overtime pay on W-2 forms.

Ruth
 
There are lots of asterisks in the BBB that makes the GOP look like pikers. And this exceptions and limitations creat more instances of cause lots of horizontal tax inequity issues: more people with identical incomes incurring different tax liabilities.

The question is will this come back to haunt the GOP in the midterms.
 
I think Trump graduated from the Musk School of Hype.

No tax on overtime! Like Full Self Driving. Neither is remotely accurate, but they are allowed to make these claims. I was kind of surprised that the US could afford not to pay tax on overtime... but this really goes a long way to show how. I remember working at a teen and overtime was never considered at the store I worked at. You could work up to that number, then someone else had to fill in.

I do like the tax on tips thing with the person as the focus being a bartender... the position mocked when the alt-right whines about Ocasio-Cortez.
 
Yesterday was the Brisbane Show Holiday, (Brisbane Metro Area Only).

I live in Logan City, so it wasn't a holiday at my house; But I work in Brisbane, so it was paid as a Public Holiday.

I worked 9 hours and 24 minutes, of which 7 hours 36 are paid at double time and a half, and the remaining 1 hour and 44 minutes are at triple time.

In a more usual week (without a holiday), I work 7:36 per day at normal time; If my shift is less than 7:36, the remainder is paid anyway (so for example today my shift is 7:22, and so I will be paid for 14 minutes that I don't work). If I work more than 7:36, time up to 8:36 is paid at time and a half, and time after 8:36 at double time.

I work Tuesday to Saturday, so Saturday is paid at time and a half (then double time after 7:36); And so is Monday, if I volunteer to work an overtime day on Monday. If I volunteer to work on Sunday, it's at double time.

Note that we get our pay calculated daily, and to the minute - a 7:38 day pays two minutes at time and a half, even if the following (or previous) day has just 7:20 of work, and so pays 7:36.

This is how overtime is supposed to be managed. Overtime at normal pay?? Based on a 40 hour week??? We would down tools faster than you can say "picket line".

Of course, it's all taxed as income. Why you would make the tax system unnecessarily complicated is beyond me.
 
No tax on overtime strikes me as deeply flawed strategy for several reasons:
  • Time-and-a-half already compensates for some of the disadvantages of long hours. Aren't many or most workers already eager to work overtime?
  • It won't affect the neediest workers. Payroll taxes are still paid. Income taxes saved if any are already minimal for the low-paid.
  • Some of the neediest people work two jobs and don't get overtime. Some people work 29 hours at each of two jobs, for 58 hours total, none of which is overtime. Employers limit them to 29 hours, since a 30-hour job mandates certain benefits.
  • Lawyers and other top professionals have control over billing and hour reporting. Bet that certain high-paid workers WILL take advantage.
  • Income reporting and tax calculation will become a nightmare, especially since there have been massive layoffs at IRS. Expect fraud, confusion, and flaws in software, etc. to be a problem. Didn't the Rs want to *simplify* tax filing?
  • The Ignorati will love Trump and the Rs for trying to help, while hating the Ds and the Deep State for the inevitable fraud and confusion.
 
Swammerdami said:
No tax on overtime strikes me as deeply flawed strategy for several reasons:
  • Time-and-a-half already compensates for some of the disadvantages of long hours. Aren't many or most workers already eager to work overtime?
  • It won't affect the neediest workers. Payroll taxes are still paid. Income taxes saved if any are already minimal for the low-paid.
  • Some of the neediest people work two jobs and don't get overtime. Some people work 29 hours at each of two jobs, for 58 hours total, none of which is overtime. Employers limit them to 29 hours, since a 30-hour job mandates certain benefits.
  • Lawyers and other top professionals have control over billing and hour reporting. Bet that certain high-paid workers WILL take advantage.
  • Income reporting and tax calculation will become a nightmare, especially since there have been massive layoffs at IRS. Expect fraud, confusion, and flaws in software, etc. to be a problem. Didn't the Rs want to *simplify* tax filing?
  • The Ignorati will love Trump and the Rs for trying to help, while hating the Ds and the Deep State for the inevitable fraud and confusion.
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Excellent analysis! Do you mind if I share this with the members of the other board I mentioned?

Ruth
 
Ruth Harris said:
Swammerdami said:
No tax on overtime strikes me as deeply flawed strategy for several reasons:
  • Time-and-a-half already compensates for some of the disadvantages of long hours. Aren't many or most workers already eager to work overtime?
  • It won't affect the neediest workers. Payroll taxes are still paid. Income taxes saved if any are already minimal for the low-paid.
  • Some of the neediest people work two jobs and don't get overtime. Some people work 29 hours at each of two jobs, for 58 hours total, none of which is overtime. Employers limit them to 29 hours, since a 30-hour job mandates certain benefits.
  • Lawyers and other top professionals have control over billing and hour reporting. Bet that certain high-paid workers WILL take advantage.
  • Income reporting and tax calculation will become a nightmare, especially since there have been massive layoffs at IRS. Expect fraud, confusion, and flaws in software, etc. to be a problem. Didn't the Rs want to *simplify* tax filing?
  • The Ignorati will love Trump and the Rs for trying to help, while hating the Ds and the Deep State for the inevitable fraud and confusion.
Click to expand...

Excellent analysis! Do you mind if I share this with the members of the other board I mentioned?

Ruth
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No problem. Everything I publish here is CopyLefted.
® All rights reserved.
® All wrongs reversed.
 
Elixir said:
bilby said:
Why you would make the tax system unnecessarily complicated is beyond me.
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To maximize opportunities to siphon off proceeds into the personal interests of El Presidenté?
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Disagree. The politicians abandoned fairness in the tax code long ago. For quite a while now it's been about promising big savings and burying the increases in details that do not on the surface look like a tax increase.

This one is actually closer to the hype than a lot of stuff.
 
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