No Tax on Overtime for All Workers Act

This section would give the Act the short title 'No Tax on Overtime for All Workers Act.'

This section would rewrite the definition of 'qualified overtime compensation' in section 225(c)(1) of the Internal Revenue Code of 1986, the term that controls which overtime pay can be deducted under that section. Under the new definition, qualified overtime compensation would cover two kinds of pay. First, it would include any overtime pay that an employer is required to pay under section 7 of the Fair Labor Standards Act of 1938, to the extent that pay is above the individual's regular rate as used in that section. Second, it would also include other compensation paid above an individual's regular rate if that pay is for work for a single employer done under an agreement between the employee, or a labor organization representing the employee, and the employer, and the agreement was entered into before the work was performed, and either of two further conditions is met: the work exceeds a standard number of hours for a specified period that the agreement sets at not less than 40 hours for a 7-day work period, or, where both the employee (including a crewmember, flight crewmember, or rail operating craft employee) and the employer are covered by the Railway Labor Act, the work is beyond scheduled or anticipated hours on duty, or is for hours on duty beyond a maximum set under the agreement for a specified period. This would extend the deduction beyond overtime that federal law already requires employers to pay, to also cover certain contract-based extra pay, including arrangements covering railway and airline crews whose schedules do not follow a standard 40-hour week. This section would apply to taxable years beginning after December 31, 2024.