No Tax on Overtime: What Does This Entail?

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No Tax on Overtime is a policy where the overtime salary of a section of workers is tax-exempt at the federal level. Although it usually does not erase the payroll taxes such as the Social Security or Medicare, it lowers the taxable income since the overtime premium is not subjected to taxation. This is aimed at raising the hourly and eligibility salaried workers take-home pay. This policy is typically restricted to the overtime rate- that which is in most cases, the overtime half-time premium, rather than the ordinary earnings. The criteria are based on the labor-law definitions of overtime and can be different according to the specifics of state or federal programs implementation.

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