President Donald Trump’s promise to put more money in American workers’ pockets took a major step forward this week as the Senate passed his ambitious One Big Beautiful Bill Act. One headline item: eliminating federal income tax on overtime pay for millions of hourly workers.
After a marathon vote-a-rama, the bill squeaked through on July 1 with a 51-50 vote. Vice President JD Vance cast the tie-breaker, securing a big win for Trump’s 2024 campaign pledge to boost blue-collar incomes.
So, who benefits? The overtime tax break lets individuals deduct up to $12,500 in overtime pay from their taxable income each year from 2025 to 2028. Couples filing jointly can deduct up to $25,000. The perk phases out for high earners—those making over $150,000 solo or $300,000 jointly. Payroll taxes for Social Security and Medicare still apply, and states can tax overtime, too.
The White House estimates the average eligible worker could save around $2,000 a year. However, the Tax Policy Center notes that only about 2% of U.S. households will qualify, with most receiving an average tax break of around $1,800. For the lowest earners, the benefit is smaller, roughly $450 a year for some, but negligible for many hourly workers making under $33,000.
Still, the Trump administration is framing this as the most significant tax cut for the middle class in history. Treasury Secretary Scott Bessent celebrated it as part of a broader package of tax relief and deregulation designed to fuel another economic boom.
Next, the One Big Beautiful Bill heads back to the House for a final vote. If approved, it will land on Trump’s desk to be signed into law—keeping his promise to reward hard work and extra effort in paychecks across America.