S.1046 - No Tax On Overtime Act of 2025 (119th Congress)
Summary
The "No Tax On Overtime Act of 2025" proposes an amendment to the Internal Revenue Code of 1986. The amendment aims to exclude overtime compensation from gross income for income tax purposes. This bill was introduced in the Senate by Mr. Hawley and referred to the Committee on Finance.
Expected Effects
If enacted, this bill would reduce the tax burden on individuals who receive overtime pay. This could lead to increased disposable income for those workers. The change would be effective for amounts received after the enactment date.
Potential Benefits
- Increased disposable income for workers receiving overtime pay.
- Potential incentive for workers to take on overtime hours.
- Simplified tax calculations for affected individuals.
- Could stimulate local economies as workers have more money to spend.
- May improve worker morale due to reduced tax burden on extra earnings.
Potential Disadvantages
- Potential decrease in federal tax revenue.
- Possible need to adjust federal budget to compensate for lost revenue.
- Complexity in defining and tracking "overtime compensation".
- Benefits disproportionately favor those who work overtime, potentially increasing income inequality.
- May incentivize employers to offer more overtime instead of hiring additional employees.
Most Disadvantaged Areas:
Constitutional Alignment
This bill falls under the purview of Congress's power to lay and collect taxes, as outlined in Article I, Section 8, Clause 1 of the Constitution. The bill amends the Internal Revenue Code, which is the primary mechanism through which the federal government exercises its taxation powers. The bill does not appear to infringe upon any specific constitutional rights or limitations.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).