Is the IRS’s 'No Tax on Overtime' Law Overhyped? Confusion Could Cost $5,000 or More

On July 4, 2025, the One Big Beautiful Bill was signed into law. Easily one of the most talked-about aspects of that bill was the "no tax on overtime" component, which was made retroactive to January 1, 2025.

It is no surprise that workers who work a lot of overtime hours were very excited about the IRS's rule change. But the reality of it is very different from the popular taglines, and misunderstandings of that could lead to people owing $5,000 or more to the IRS.

What ‘No Tax on...