Sec. 70202. No tax on overtime
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Part VII of subchapter B of chapter 1, as amended by the preceding provisions of this Act, is amended by redesignating section 225 as section 226 and by inserting after section 224 the following new section: There shall be allowed as a deduction an amount equal to the qualified overtime compensation received during the taxable year and included on statements furnished to the individual pursuant to section 6041(d)(4) or 6051(a)(19). The amount allowed as a deduction under this section for any taxable year shall not exceed $12,500 ($25,000 in the case of a joint return). The amount allowable as a deduction under subsection
(a)(after application of paragraph (1)) shall be reduced (but not below zero) by $100 for each $1,000 by which the taxpayer's modified adjusted gross income exceeds $150,000 ($300,000 in the case of a joint return). For purposes of this paragraph, the term modified adjusted gross income means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section 911, 931, or 933. For purposes of this section, the term qualified overtime compensation means overtime compensation paid to an individual required under section 7 of the Fair Labor Standards Act of 1938 that is in excess of the regular rate (as used in such section) at which such individual is employed. Such term shall not include any qualified tip (as defined in section 224(d)). No deduction shall be allowed under this section unless the taxpayer includes on the return of tax for the taxable year such individual's social security number. For purposes of paragraph (1), the term social security number shall have the meaning given such term in section 24(h)(7). If the taxpayer is a married individual (within the meaning of section 7703), this section shall apply only if the taxpayer and the taxpayer's spouse file a joint return for the taxable year. The Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section, including regulations or other guidance to prevent abuse of the deduction allowed by this section. No deduction shall be allowed under this section for any taxable year beginning after December 31, 2028. . Section 63(b), as amended by the preceding provisions of this Act, is amended by striking and at the end of paragraph (4), by striking the period at the end of paragraph
(5)and inserting , and , and by adding at the end the following new paragraph: the deduction provided in section 225. . Section 6051(a), as amended by the preceding provision of this Act, is amended by striking and at the end of paragraph (17), by striking the period at the end of paragraph
(18)and inserting , and , and by inserting after paragraph
(18)the following new paragraph: the total amount of qualified overtime compensation (as defined in section 225(c)). . Section 6041(a), as amended by section 70201(e)(1)(A), is amended by inserting and a separate accounting of any amount of qualified overtime compensation (as defined in section 225(c)) after occupation of the person receiving such tips . Section 6041(d), as amended by section 70201(e)(1)(B), is amended by striking and at the end of paragraph (2), by striking the period at the end of paragraph
(3)and inserting , and , and by inserting after paragraph
(3)the following new paragraph: the portion of payments that are qualified overtime compensation (as defined in section 225(c)). . Section 6213(g)(2), as amended by the preceding provisions of this Act, is amended by striking and at the end of subparagraph (X), by striking the period at the end of subparagraph
(Y)and inserting , and , and by inserting after subparagraph
(Y)the following new subparagraph: an omission of a correct social security number required under section 225(d) (relating to deduction for qualified overtime). . The table of sections for part VII of subchapter B of chapter 1, as amended by the preceding provisions of this Act, is amended by redesignating the item relating to section 225 as an item relating to section 226 and by inserting after the item relating to section 224 the following new item: Sec. 225. Qualified overtime compensation. . The Secretary of the Treasury (or the Secretary's delegate) shall modify the procedures prescribed under section 3402(a) of the Internal Revenue Code of 1986 for taxable years beginning after December 31, 2025, to take into account the deduction allowed under section 225 of such Code (as added by this Act). The amendments made by this section shall apply to taxable years beginning after December 31, 2024. In the case of qualified overtime compensation required to be reported for periods before January 1, 2026, persons required to file returns or statements under section 6051(a)(19), 6041(a), or 6041(d)(4) of the Internal Revenue Code of 1986 (as amended by this section) may approximate a separate accounting of amounts designated as qualified overtime compensation by any reasonable method specified by the Secretary.