"No tax on overtime" deduction: guidance on the temporary tax deductions for overtime included in the One Big Beautiful Bill Act of 2025
The purpose of this report is to provide practical guidance to local government employers on the employer-facing aspects of the “No Tax on Overtime” deduction. Specifically, this report outlines key concepts of the deduction, identifies payroll and reporting considerations, and highlights issues unique to public-sector compensation structures. This document is intended to support compliance, promote consistency, and reduce risk while recognizing that federal agencies may issue additional regulations or interpretive guidance for this provision in the future.
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