President Trump has repeatedly promised to abolish income tax on overtime pay. However, the bill passed by the U.S. House wouldn’t reduce tax for all workers putting in extra hours. Only hourly and some salaried employees required to be paid time-and-a-half after working 40 hours in a week would be affected. And only the 50% additional amount would be tax-free. Workers would still owe tax on regular wages paid for overtime work. Plus, only income tax would be affected. Overtime wages would still be subject to payroll taxes and state tax in states that collect it. As the U.S. Senate considers the provision, there’s talk of limiting it further. So it’s uncertain whether it will become law.
Our Blog 