H.R. 561 — Overtime Pay Tax Relief Act of 2025

This section establishes a new above-the-line deduction under IRC §224 for overtime compensation (i.e., pay required under §7 of the Fair Labor Standards Act of 1938 for hours worked over 40 in a workweek) received by an individual, equal to the lesser of such compensation or 20% of the individual's other wages from the same employer for the taxable year. The deduction is unavailable to taxpayers with adjusted gross income exceeding $100,000 ($150,000 for heads of household; $200,000 for married couples filing jointly) and terminates for amounts received after December 31, 2029. (Thus, the deduction is available to both itemizers and non-itemizers; is exempt from the miscellaneous itemized deduction floor and overall itemized deduction limit; and requires the Treasury Secretary to modify income tax withholding tables and procedures.)