Overtime Wages Tax Updates

As a result of the One Big Beautiful Bill passed in 2025, employees will not be taxed on overtime earnings for 2025.

What does this mean for overtime wages?

• Only the overtime premium portion is deductible (e.g. if regular pay is $20 per hour and OT is $30 per hour, only the $10 hour premium is deductible.)
• When W-2s are distributed, overtime amounts will be reported separately in Box 14, allowing employees to deduct this amount from their overall taxable earnings when filing their tax returns.

See the example of this change on the right-hand side.

To help employees understand this change and how it affects their tax filing, we will be providing detailed communication and FAQs around the time W-2s are distributed. W-2 forms will be mailed on or before January 31, 2026.

Please direct any immediate questions from your team members to AskHR and remind them to watch for the upcoming guidance materials.