President Trump promised no taxes on overtime through the budget megabill he signed last summer. But a left-leaning policy group has taken a look at how that plan breaks out, and said the vast majority of Ohioans who work overtime won’t see significant savings.
More than 90% of Ohio workers won't be able to benefit from the no tax on overtime proposal, which is a temporary federal income tax reduction, said Policy Matters Ohio’s Work and Wages Fellow Bailey Sandin.
“Just about nine percent of workers will benefit. And they are only going to be able to see their taxes decrease by about $1,440," Sandin said in an interview.
In fact, she said the bulk of those benefits will be going to households that already earn the most: “The largest benefits are going to go to households with income between $100,000 and $500,000 annually.”
Those with an annual income above $300,000 or $150,000 if filing single will receive less than the full benefit of the deduction as it phases out before reaching the income cap of $550,000, or $275,000 if filing single.
Additionally, Sandin said only a portion, or what is known as the half, of the overtime can be written off.
“If you are making $20 an hour and your time and a half is $30 an hour, you can only deduct the additional $10 an hour – that and a half portion," Sandin said. "So in reality, it’s not as big of a benefit as it is being told.”
The “no tax on overtime” provision was included in the One Big Beautiful Bill that President Trump signed into law in July 2025. What's been called a "no tax on tips” benefit is also part of that new law. Sandin said a separate analysis is being done on that provision.
The report comes as taxpayers are starting to prepare to file their annual federal and state returns. The "no tax on overtime" proposal allows employees to take off qualified overtime compensation from federally taxable income as a new and temporary deduction. It will expire in 2028.
The full report from Policy Matters Ohio can be found here.
