The Impact of the One Big Beautiful Bill Act (OBBBA) on Employers
In this Client Alert, we describe some of the ways the recently enacted One Big Beautiful Bill Act (OBBBA) will impact employers. Tax Provisions: The tax provisions of the OBBBA are some of the most-anticipated changes. I. No tax on overtime pay Beginning in 2025, an employee who works “qualified overtime” is eligible to deduct up to $12,500 on their federal income taxes.[ 1] For married persons filing jointly, the maximum deduction increases to $25,000; however, married persons who do not file jointly cannot get the deduction at all. The allowable deduction is reduced (but not below zero) by $100 for each $1,000 that the employee’s modified adjusted gross income exceeds $150,000 ($300,00 for married persons filing jointly). It is important to note that the deduction only applies to overtime required under the Fair Labor Standards Act (FLSA) that is in excess of the individual’s regular rate (i.e., only the “half” of “time and a half”). State-mandated over...