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re: How will no tax on OT work? Example
Posted on 5/22/25 at 7:57 am to Cow Drogo
Posted on 5/22/25 at 7:57 am to Cow Drogo
Should be they pay tax on the base rate and then whatever the OT multiplier is, they don't pay taxes on.
So if its 1.5, they don't pay taxes on the .5
if its holiday pay and its 2x base, they don't pay tax on the second 1x.
So if its 1.5, they don't pay taxes on the .5
if its holiday pay and its 2x base, they don't pay tax on the second 1x.
0
Posted on 5/22/25 at 7:58 am to theballguy
quote:If you work an extra 10 hours that week, that makes $300 ($20/hr x 1.5). Therefore, the paycheck will be around $900 or so instead of $700 or so.
So if you work an extra 10 hours that week, that makes $200. Then this paycheck will be around $800 or so instead of $700 or so.
Posted on 5/22/25 at 7:58 am to Cow Drogo
It’s terrible policy regardless. Same with not taxing tips
Posted on 5/22/25 at 8:00 am to theballguy
What if your over time pay isn't based on a 40 hour work week but daily pay... My job has a trip rate of pay. Say the basic trip rate is 364.. If you clock out anytime before 8 hours you get that 364 but anything over 8 hours is over time. But it's not time and a half since we don't get an hourly rate of pay but it is a numerical figure around 64 an hour and it's actually listed as "overtime under 12 hours"and "overtime over 12 hours". I assume that'll all be tax free?
Posted on 5/22/25 at 8:03 am to LChama
quote:
Have you been alive in the USA and paid attention for the past 50 years?
What does that have to do with anything? Did you read the bill?
Posted on 5/22/25 at 8:07 am to Cow Drogo
What would be interesting is if corporations exploit a potential loophole on no tax on OT.
For example management could convert existing salaried employees to an hourly wage and agree to pay them for 60 hours of work a week regardless of how many hours worked.
Then they could renegotiate a current salary from $150k to $135K where the employee is taking home more money and the corporation is paying out $15k less. It's a win/win.
For example management could convert existing salaried employees to an hourly wage and agree to pay them for 60 hours of work a week regardless of how many hours worked.
Then they could renegotiate a current salary from $150k to $135K where the employee is taking home more money and the corporation is paying out $15k less. It's a win/win.
This post was edited on 5/22/25 at 8:11 am
Posted on 5/22/25 at 8:08 am to CENLALSUFAN
quote:
What if your over time pay isn't based on a 40 hour work week but daily pay.
The entire state of California is daily overtime pay. So I am guessing that it's "overtime" and not "anything over 40."
Posted on 5/22/25 at 8:10 am to Cow Drogo
To make it simple just make the first $150k for singles and the first $350k for married couples, no income taxes.
Then you don't have to worry about all the on tax on tips or OT details.
Then you don't have to worry about all the on tax on tips or OT details.
Posted on 5/22/25 at 8:10 am to theballguy
quote:
Plus, they'd probably still make you pay FICA on your overtime and of course,
I'm pretty sure this is going to happen. When I read the no tax on cash tips it said it would still be subject to FICA so I am sure they will do the same with OT.
Posted on 5/22/25 at 8:16 am to Cow Drogo
Closest example I can provide is worker's comp premiums. All hours worked are counted in calculation but overtime premium is not. The payrate one earns does not change once they are on overtime, a separate pay premium is applied. Commercial payroll software is already calculating like this so it could ne a seamless transition.
Of course the government is likely to place some ridiculous reporting requirement on the employer that will make the whole thing a nightmare.
Of course the government is likely to place some ridiculous reporting requirement on the employer that will make the whole thing a nightmare.
Posted on 5/22/25 at 8:20 am to Jorts R Us
quote:
Well, CPA. Have you read the bill?
The quoted text below is what I said. This statement is true about every tax law. What the bill says changes this quote in no way.
quote:
If the IRS gets to decide how to interpret a tax law, it will always interpret it in the way that results in the most revenue being collected.
This post was edited on 5/22/25 at 8:21 am
Posted on 5/22/25 at 8:22 am to Cow Drogo
i take it to mean if you make $2,000 a week on 40 hours anything more is not taxable. Some people make straight time OT and not 1.5x...so to me the most sense would be anything more than your 40 hr rate because the Feds consider anything over 40 hrs as overtime.
My question would be what about nurses for example. They may work 12 hr shifts and make 4 hours at time and a half each shift. If they work 36 hours i am guessing their pay gets taxed normally...and higher than the 40 hrs would get taxed typically
My question would be what about nurses for example. They may work 12 hr shifts and make 4 hours at time and a half each shift. If they work 36 hours i am guessing their pay gets taxed normally...and higher than the 40 hrs would get taxed typically
Posted on 5/22/25 at 8:25 am to imjustafatkid
quote:
The quoted text below is what I said. This statement is true about every tax law. What the bill says changes this quote in no way.
So you didn't read the bill and have no idea what is or isn't left up to interpretation. Got it.
Posted on 5/22/25 at 8:33 am to Cow Drogo
40 hours X $50 per hour is $2000 are you retarded? 10 hours X $75 per hour is $750 the $2000 is taxed the $750 is not.
but in the real world, 150k job is salaried jethro
but in the real world, 150k job is salaried jethro
Posted on 5/22/25 at 8:35 am to Cow Drogo
It will not apply to payroll only income tax. Will only apply to single filers up to $100k with $10k credit. Couples up to $200K with up to $20K credit.
Posted on 5/22/25 at 8:44 am to dickkellog
quote:
but in the real world, 150k job is salaried jethro
This is not an accurate statement.
Posted on 5/22/25 at 8:54 am to theballguy
quote:I assume FICA is still being withheld, but I no federal income tax on the OT is very nice. I would have been happy with just a tax reduction on the OT, but 0%? That's awesome! More money in my pocket, and less to the bloated federal government that uses it to fund Sesame Street in Iraq!
Let's say you normally make $20/hour and you work 40 hours. Well, $800 is taxable, so you get to keep around $600 or so. Anything over that, you get to keep. So if you work an extra 10 hours that week, that makes $200. Then this paycheck will be around $800 or so instead of $700 or so.
I wouldn't count on that happening though. Plus, they'd probably still make you pay FICA on your overtime and of course, the state would still get theirs.
Posted on 5/22/25 at 9:00 am to BigBinBR
quote:That's for State income tax. Federal law is any time over 40 hours in a week. This law will put a lot of pressure on State governments to drop their income tax on OT.
The entire state of California is daily overtime pay. So I am guessing that it's "overtime" and not "anything over 40."
Posted on 5/22/25 at 9:05 am to Cow Drogo
It's only no tax on the OT premium
So example of $20/hr @ 50 hours. This is:
40 hours * $20 = $800
10 hours * $30 = $300
$1,100 of gross pay
Base pay of $1000 taxed as income (that is 50 hours @ $20/hr)
OT premium pay of $100 is not taxed (that is 10 overtime premium hours @ $10/hr)
All $300 of overtime pay is not exempt from taxation, the first $20/hr of the OT pay is not exempt, the last $10/hr is what is exempt
So example of $20/hr @ 50 hours. This is:
40 hours * $20 = $800
10 hours * $30 = $300
$1,100 of gross pay
Base pay of $1000 taxed as income (that is 50 hours @ $20/hr)
OT premium pay of $100 is not taxed (that is 10 overtime premium hours @ $10/hr)
All $300 of overtime pay is not exempt from taxation, the first $20/hr of the OT pay is not exempt, the last $10/hr is what is exempt
This post was edited on 5/22/25 at 9:07 am
Posted on 5/22/25 at 9:07 am to Topwater Trout
quote:When I worked in the hospital, I worked three 12 hour shifts a week. If I picked up another shift, the first four hours on the 4th day was at my regular rate, the last 8 were all at 1.5x. When our census was extremely high, they encouraged staff to pick up as many extra shifts as they wanted and offered extra money on top of your regular rate. Thing is, if you didn't know to adjust your W-4 before that payroll, you would be kicked into a higher tax bracket for withholding purposes, and all that extra would not result in whole lot of extra money in your pocket. Yes, I know you would receive it back when you file your taxes, but who in their right mind wants to give the federal government an interest free loan for a year?
My question would be what about nurses for example. They may work 12 hr shifts and make 4 hours at time and a half each shift. If they work 36 hours i am guessing their pay gets taxed normally...and higher than the 40 hrs would get taxed typically
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