Episode 64: In this episode, Timalyn breaks down a hot topic from the newly passed One Big Beautiful Bill Act, the No Tax on Overtime Act, and what it really means for working taxpayers starting in 2025.
There has been a lot of confusion online suggesting that overtime income is completely tax-free. But is that true?
Not exactly.
Timalyn explains how the law allows an above-the-line deduction for qualifying overtime income. That means you can deduct a portion of your overtime pay from your taxable income, but it is not completely exempt.
She walks you through who qualifies, how much can be deducted, and what income limits apply.
Here is a quick breakdown:
✔️ If you are filing single, you can deduct up to $12,500
✔️ Married couples filing jointly can deduct up to $25,000
❌ Married filing separately does not qualify for this deduction
There are income phaseouts to be aware of. If your income exceeds $150,000 as a single filer or head of household, or $300,000 if married filing jointly, the deduction decreases by $100 for every $1,000 you earn over the limit.
Timalyn also explains how employers will report this on your W-2 and what counts as premium overtime pay under the Fair Labor Standards Act. Only the premium portion, meaning the amount you earn above your regular rate, will qualify for the deduction.
This deduction is not permanent. It only applies to tax years 2025 through 2028. There is also a Social Security number requirement, and this may affect how couples decide whether to file jointly or separately.
Please note that this deduction only applies to income tax. It does not apply to social security, Medicare, state, or local taxes.
Need Tax Help Now?
If you are currently facing an audit or have received a notice, schedule a consultation with Timalyn through her website: www.bowenstaxsolutions.com
As we conclude Episode 64, make sure to subscribe on Spotify, Apple Podcasts, or your favorite podcast platform. Remember, Timalyn Bowens is America's Favorite EA, and she's here to fill the tax literacy gap — one taxpayer at a time.
Thank you for listening to today's episode. For more information about tax relief, visit: https://www.Bowenstaxsolutions.com. Got feedback or an episode suggestion? If you have any feedback or suggestions for an upcoming episode topic, please submit them here: https://www.americasfavoriteea.com/contact.
Disclaimer: This podcast is for informational and educational purposes only. It provides a framework and possible solutions for solving your tax problems, but it is not legally binding. Please consult your tax professional regarding your specific tax situation.
