US SB1606

Creates a new federal tax deduction for overtime compensation up to $10,000 per individual ($20,000 for joint filers) per taxable year

Deduction phases out by $50 for each $1,000 of modified adjusted gross income exceeding $100,000 ($200,000 for joint filers)

Overtime compensation must be paid at a rate of at least 1.5 times the regular pay rate for hours exceeding 40 in a 7-day work period, as required by the Fair Labor Standards Act or a collective bargaining agreement

Deduction is available to both itemizers and non-itemizers and is exempt from miscellaneous itemized deduction limitations

Employers must report total overtime compensation on W-2 forms, and Treasury must update withholding tables; effective for taxable years beginning after December 31, 2025