What’s changing with the 2025 federal law about tax-free overtime pay?

• Starting in 2025, the extra money you earn for working overtime won’t be taxed for federal income tax.
• This applies up to $12,500 per year, or $25,000 if you’re married and file jointly.
• This rule lasts for tax years 2025 through 2028.

What is the “premium portion” of overtime pay?

• The “premium portion” is the extra pay you get for working overtime, usually 1.5 times your regular pay.
• Only the extra part above your normal pay is tax-free.

Where will I see this on my W-2?

• You will see the overtime premium portion listed in Box 14 on your W-2.
• It will be labeled “OT Prem,” which shows the overtime amount when filing your tax return.

Will my paycheck be bigger now?

• No. Your paychecks will not change. The tax break happens when you file your tax return.

Do I need a new W-4?

• No. You don’t need to fill out a new W-4.