IRS Announces ‘No Tax on Overtime’ Policy Starting 2025? Here’s What Workers Really Need to Know

WASHINGTON, D.C. — Claims circulating online that the Internal Revenue Service (IRS) will eliminate federal income taxes on overtime pay starting in 2025 are not accurate, according to current federal tax law and official IRS guidance.

As of now, there is no IRS rule or federal law that exempts overtime wages from federal income tax beginning in 2025. Overtime pay continues to be treated as taxable income, just like regular wages.

Where the Confusion Is Coming From

The rumor appears to stem from political proposals, social media posts, and opinion commentary that have discussed ideas about reducing taxes on overtime or providing relief for hourly workers. While such ideas have been debated publicly, they have not been enacted into law, nor has the IRS issued any policy implementing a “no tax on overtime” rule.

The IRS does not create tax exemptions on its own. Any change like this would require:

• Congressional legislation,

• Passage by both chambers of Congress,

• A presidential signature,

• And formal IRS rulemaking and guidance.

None of those steps have occurred for a nationwide overtime tax exemption.

What the IRS Has Actually Said

The IRS has warned taxpayers to be cautious about tax misinformation, especially claims shared online that promise major tax breaks without official confirmation. The agency regularly reminds workers that:

• All wages, including overtime, are subject to federal income tax unless Congress changes the law.

• Social Security and Medicare taxes also continue to apply to overtime pay.

• False tax claims can lead to filing errors, penalties, or audits.

What Workers Should Expect for 2025

For the 2025 tax year:

• Overtime pay will still appear on W-2 forms as taxable income.

• Federal income tax withholding rules remain unchanged.

• Any future tax relief related to overtime would need to be clearly announced by Congress and the IRS through official channels.

Workers are encouraged to rely on official IRS announcements, congressional legislation, or certified tax professionals, not viral posts or unofficial headlines.

Bottom Line

Despite widespread online claims, there is no confirmed “no tax on overtime” policy starting in 2025. Until federal law changes, overtime pay remains fully taxable under existing IRS rules.

Taxpayers should stay informed, verify claims through official sources, and avoid making filing decisions based on unverified information.