IRS Introduces New Overtime Deduction for Some Workers

The U.S. is now less than 60 days from the April 15 federal tax filing deadline, and this year's returns come with a significant new break for many hourly workers: a deduction for part of their overtime pay.

The change stems from the "One, Big, Beautiful Bill Act," which creates a new above-the-line deduction for overtime premiums, on top of the long-standing exclusion for certain tip income and new deductions for seniors and other groups, as described by tax analysts at the Cato Institute, an American libertarian think tank headquartered in Washington, D.C.

Under the law, an individual taxpayer can deduct up to $12,500 per year of qualifying overtime premiums, or up to $25,000 for married couples filing jointly, potentially reducing taxable income and lowering their overall tax bill. The new deduction is part of a broader effort to reduce federal income tax burdens on work-related earnings, including overtime and tips, and to simplify the tax code for many wage earners.

Please select this link to read the complete article from WBNS-10TV.