Yes, that is correct the "no tax on overtime" provision in the One Big Beautiful Bill is retroactive to January 01, 2025. Eligible employees can deduct qualified overtime from their federal taxable income for hours worked after that date.
Under this new provision, eligible workers can deduct up to $12,500 of overtime pay earned during the year (up to $25,000 for married couples filing a joint return). But if your income is more than a certain amount, the deduction is gradually phased out.
Click here for I Worked Overtime Every Week. Here’s What It Did to My Tax Bill.
Click here for No Tax on Overtime Explained: Qualified Overtime Deduction Rules for 2025.
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