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The federal overtime provisions are contained in the fair labor standards act Enter the “no tax on overtime” provision, part of the broader one big beautiful bill (obbba), enacted into law on july 4, 2025 Many americans who work overtime will get a break on their taxes for the next few years — but it may not be as hefty as they think. Your employer must pay you at the overtime rate for the extra hours you worked Use the department of labor’s overtime pay calculator to estimate how much overtime pay you. The complete guide to u.s Overtime laws, salary thresholds, and compliance strategies Learn how to calculate overtime and avoid legal penalties in 2025. The new federal “no tax on overtime” law may not mean what you think it does To start with, all of your overtime pay is not included “no tax on overtime” is a highly promoted part of. The rate of overtime pay must be no less than time and a half their usual hourly rate of pay (or 1.5 times the regular rate of pay) Additionally, there is no limit to the number of hours an employee can work in any workweek. This guide provides employers with a thorough understanding of federal overtime requirements, including how to determine employee eligibility, calculate correct pay rates, and avoid common compliance pitfalls, with specific attention to variations under state laws like california’s. The new federal overtime tax deduction allows up to $25,000 deductions on premium pay This guide has everything employers and employees need to know. In this article, we define overtime pay, explain how it functions under federal law and state laws, review different types of overtime work, and provide steps to calculate it using your regular rate of pay or hourly rate.