As of July 4, 2025, the One Big Beautiful Bill Act allows workers to deduct up to $12,500 of overtime pay ($25,000 for joint filers) from their federal taxable income for tax years 2025 through 2028. It's important to note that Trump's new tax bill doesn't make all overtime pay fully exempt from federal income tax.

The changes won’t happen all at once. Here’s when Americans can expect key provisions of the GOP tax and spending bill to go into effect.

Now that President Donald Trump has signed the bill, workers will be able to deduct up to $25,000 in reported tips and $12,500 in overtime pay from their taxable income on their federal tax returns. This means you won’t see an immediate boost in your take-home pay — taxes will still come out of your paycheck — but when you file for 2025 early next year,