Did No Tax on Overtime Pass?

Yes, the widely discussed federal version of the No Tax on Overtime policy passed in 2025. Once enacted, it allowed eligible workers to exempt a capped portion of their overtime premium pay from federal income tax beginning with the 2025 tax year. However, its application can differ by state, especially in states with their own income tax laws. While the federal rule applies nationwide, states may or may not offer similar exemptions. Workers should check both federal and state rules to understand how much of their overtime earnings are affected by the change.

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