We’ll have to see how it shakes out, but the bill states eligible overtime is overtime required to be paid by section 7 of the FLSA.
Our OT, those of us that get it, is not required to be paid as we are exempt. We get OT because we demand it.
Hmmmmm. Yes, you appear to be correct. I just now saw the actual language in the bill.
What is the effective date of the No Tax on Overtime provision?
Do we need to prod employers to take us off day rates immediately and put us on hourly plus OT?
Has anybody talked to a tax professional to determine whether sailors qualify for this tax deduction? Unlicensed, officer, or both? Separate OT sheets or stipend-in-lieu? My employer’s payroll department basically shrugged when I asked.
My employer said that - No Tax on Overtime - has an income cap and that we make too much money to qualify.
I have not tried to verify if that is correct.
For easy figuring, let’s just say that a day rate is $1060, or $7420 a week.
on an hourly basis that would be something like:
40 hours at $70 an hour = $2800
44 hours at time and a half ($105)=$4620
$2800 + $4620 = $7,420.00
it sure would be nice to only be taxed on the $2800 and be able to take home all of the overtime!
My girl is CPA. the training she just got regarding the tax break on OT says basically the tax on first 12.5k$ will be waived. OT must be declared separately on your tax forms from employer. taxes will be witheld as normal and we should get a larger refund. i work in california so our weekly pay is already separated into 40 hours regular time and 44 hours OT weekly. at my tax rate of around 30% that will get me an extra 3-4k refund. i will take it. it will help defray some of the costs of head shaking at politics these days,
Merchant mariners get no tax break.
[https://www.seafarers.org/seafarerslogs/2025/09/labor-groups-seek-tax-relief-for-members/]
like obamacare….dont worry we will subsidize it till we dont..
You calculated it incorrectly. The entire OT is not deductible. Only the portion above straight time.
if it passes it will be a wind fall for you. For retirees the bill will also eliminate tax of social security
wrong. the first 12.5k in overtime pay is not added to taxable income. multiply that umber by your tax rate and your refund will be that much more. as long as your checks have OT in a seperate catagory like they do here in california.
It is the first $12.5k in the premium portion of overtime pay (e.g., the “half” in “time-and-a-half”). But it also doesn’t apply to workers who are FLSA exempt. And almost all mariners I’ve met are exempt. So this deduction won’t apply at all.
thats not what my CPA girlfriend says. she just did the required training issued by the IRS on the subject. maybe its a california thing where i work, and get paid hourly, and have a seperate box on W2 with OT wages in it. im no tax pro, but my girl is.
Further reading seems to confirm what @portofdc and @SteamerCook have said - this is a very narrow exemption purely for people getting paid federally-mandated overtime per the FLSA, which basically none of us will be. So really it’s “No Tax on (part of your) Overtime (so long as you meet several strict definitions).”
The winning never ceases! So much winning!
Here is a cut from the IRS facts sheet:
“No Tax on Overtime”
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New deduction: Effective for 2025 through 2028, individuals who receive qualified overtime compensation may deduct the pay that exceeds their regular rate of pay – such as the “half” portion of “time-and-a-half” compensation – that is required by the Fair Labor Standards Act (FLSA) and that is reported on a Form W-2, Form 1099, or other specified statement furnished to the individual.
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Maximum annual deduction is $12,500 ($25,000 for joint filers).
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Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).
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Taxpayer eligibility: Deduction is available for both itemizing and non-itemizing taxpayers.
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Taxpayers must:
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include their Social Security Number on the return and
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file jointly if married, to claim the deduction.
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Reporting: Employers and other payors are required to file information returns with the IRS (or SSA) and furnish statements to taxpayers showing the total amount of qualified overtime compensation paid during the year.
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Guidance: The IRS will provide transition relief for tax year 2025 for taxpayers claiming the deduction and for employers and other payors subject to the new reporting requirements.
If you do have an OT premium like time and a half, it might be possible that your employer has designated your position as non-exempt. Then you’d be able to take advantage of the deduction. Good luck. You might want to check with your HR people.
Smart employers will figure out how to take advantage of this opportunity to increase their employees income at no extra cost.
However, the typical arrogant employer is going to do what they have always done and ignore this tax break.
During wage comparisons we are going to have to factor in whether or not there is an overtime tax break.
I don’t see that as likely. There is a reason mariners are FSLA exempt. We are expected to work longer hours/weekends/holidays and be on-call at all times to ensure safe navigation of the vessel. Hopefully, in exchange we receive a fair pay rate and an abundance of uninterrupted time off. Some operators may be able to apply a 40 hour work week, but this would break most.