PA HB1357

Taxpayers may deduct the full amount of overtime pay received from their taxable income on Pennsylvania personal income tax returns, with refunds issued if the deduction results in negative tax liability

"Overtime pay" is defined as wages for hours worked exceeding 40 hours per week or 8 hours per day, consistent with federal standards under 5 U.S.C. § 5542

Employers are prohibited from reducing or denying overtime hours to employees solely because of the new tax deduction, with violations subject to a $2,000 fine

Employers must continue withholding personal income tax from all employee compensation, including overtime pay, at the time wages are paid

Applies to taxable years beginning on or after December 31, 2025, with immediate effect upon enactment