THE DEALER’S GUIDE TO NEW “NO TAX ON OVERTIME” RULES Key Tips to Avoid Surprises BY FISHER PHILLIPS Automobile dealerships might be surprised by some important nuances in the “No Tax on Overtime” rules that rolled out nationwide last year, and now is the time to get familiar with the fine print. The new federal tax rules are surrounded by misconceptions and, in many instances, are more complicated for employers in the retail automotive industry. We’ll break it all down and give you the top employer takeaways and next steps. QUICK OVERVIEW The One Big Beautiful Bill Act (OBBBA), which President Trump signed into law last year, includes a new federal income tax deduction related to overtime pay. This new rule (which applies for tax years 2025 through 2028): • Allows an eligible worker to take a deduction on their individual tax return of up to $12,500 (or $25,000 if married filing jointly) in “qualified overtime compensation” they received during the applicable tax year; and • Imposes new filing and information reporting requirements on employers related to such qualified overtime compensation. 10
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