{"id":42676,"date":"2026-04-02T12:25:08","date_gmt":"2026-04-02T12:25:08","guid":{"rendered":"https:\/\/financialrush.com\/?p=42676"},"modified":"2026-04-02T12:25:08","modified_gmt":"2026-04-02T12:25:08","slug":"trumps-no-tax-on-overtime-deduction-is-a-home-run-treasury-says","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=42676","title":{"rendered":"Trump’s ‘no tax on overtime’ deduction is a ‘home run,’ Treasury says"},"content":{"rendered":"

\n<\/p>\n

<\/p>\n
\n
\n
\n

Jetta Productions Inc | Digitalvision | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n

\n

Many Americans are seeing bigger tax refunds<\/a> this season due to President Donald Trump<\/a>\u2018s 2025 legislation, which includes the new \u201cno tax on overtime<\/a>\u201d deduction. <\/p>\n

This season, that tax break has seen a surge of popularity, which could impact its future, experts say.<\/p>\n

While the provision doesn\u2019t eliminate taxes on overtime pay<\/a>, it allows certain workers to deduct a portion of eligible compensation \u2014 up to $12,500<\/a> for single filers or $25,000 for married couples filing jointly per year \u2014 from 2025 through 2028. <\/p>\n

Almost 50% of the tax returns filed this season have included one of Trump\u2019s \u201csignature campaign policies,\u201d Treasury Secretary Scott Bessent said Sunday during a \u201cFox and Friends\u201d interview<\/a>.<\/p>\n

These returns include Trump\u2019s deductions for tip income<\/a>, overtime earnings<\/a>, seniors<\/a> and auto loan interest<\/a>, which are reported on the new Schedule 1-A<\/a> for individual returns. <\/p>\n

\u201cThe home run has been no tax on overtime,\u201d which filers have claimed on 25% of returns received by the IRS, Bessent said. <\/p>\n

That amounts to nearly 20 million overtime deduction claims<\/a>, out of roughly 79 million returns received, as of March 20, according to the IRS and Treasury. <\/p>\n<\/div>\n

\n
\n
\n
\n

Read more CNBC personal finance coverage<\/h2>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
\n

\u201cI think everybody here would agree with me, that that\u2019s the American way,\u201d Bessent said about the overtime deduction<\/a> on Monday during a Long Island business roundtable. \u201cWork harder and keep more of your money.\u201d\u00a0\u00a0<\/p>\n

The overtime deduction applies to compensation covered under the Fair Labor Standards Act, or FLSA. This law says non-exempt employees must receive at least 1.5 times their normal pay rate once they exceed 40 hours per week. This definition excludes some workers covered by state or labor contract mandates.\u00a0<\/p>\n

In 2023, about 98 million employed workers were eligible for overtime under the FLSA, according to a\u00a02024 analysis<\/a>\u00a0from The Budget Lab at Yale. But only 8% of hourly workers and 4% of salaried workers have FLSA-qualified overtime on a regular basis.\u00a0\u00a0<\/p>\n

Typically, overtime pay is most common in sectors such as manufacturing, health care, transportation, and public safety, according to a\u00a0Feb. 10 report<\/a>\u00a0from the Cato Institute, a libertarian think tank.\u00a0<\/p>\n<\/div>\n

How the overtime deduction could impact future filers <\/h2>\n
\n

Mandatory employer reporting should improve clarity for 2026 returns since companies will have to separate overtime on tax forms<\/a>, such as Forms W-2, 1099-NEC or 1099-MISC, he said.<\/p>\n

However, starting in January 2026, employee paycheck withholdings<\/a> should reflect the tips and overtime deductions, which means workers will see the benefit each pay period rather than via a lump sum next tax season.<\/p>\n

\u201cThat may change how taxpayers experience this benefit,\u201d Andrew Lautz, director of tax policy for the Bipartisan Policy Center, a nonprofit think tank, told CNBC. <\/p>\n<\/div>\n

The future of the overtime deduction<\/h2>\n
\n

The overtime deduction is scheduled to expire after 2028, and despite initial popularity, it\u2019s difficult to predict whether Congress will extend the tax break beyond that date. <\/p>\n

It\u2019s hard to project taxpayer behavior for specific types of income, Alex Muresianu, a senior policy analyst at the Tax Foundation, told CNBC. <\/p>\n

If the overtime deduction is \u201cdramatically more expensive than projected, the ask to extend or make it permanent is a lot more difficult,\u201d he said.<\/p>\n<\/div>\n

\n
\n
\n
\n
<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
\n

Meanwhile, there has been bipartisan interest<\/a> in expanding the overtime deduction to all workers since the current law only includes compensation covered under the FLSA.<\/p>\n

And it\u2019s possible that political coalitions could develop to push for other expansions, Lautz from the Bipartisan Policy Center said.<\/p>\n<\/div>\n

Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.<\/a><\/div>\n<\/div>\n\n
Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Jetta Productions Inc | Digitalvision | Getty Images Many Americans are seeing bigger tax refunds this season due…\n","protected":false},"author":3,"featured_media":42677,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[],"class_list":["post-42676","post","type-post","status-publish","format-standard","has-post-thumbnail","category-investing","cs-entry","cs-video-wrap"],"_links":{"self":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/42676","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=42676"}],"version-history":[{"count":0,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/42676\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/media\/42677"}],"wp:attachment":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=42676"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=42676"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=42676"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}