Can Truckers Deduct Overtime Pay Under the New “No Tax on Overtime” Rule?
💡 Short answer? It depends on how you’re paid — and how much overtime you log. But here’s what we know 👇
⏱️ What the “No Tax on Overtime” Rule Actually Says
As part of the One Big Beautiful Bill, the U.S. government has passed a federal exemption that makes overtime pay free from federal income tax starting in 2025.
🧾 According to WSLS, here’s how it works:
- ✅ Overtime earnings will not be federally taxed (up to a capped amount)
- ✅ Applies to hourly W‑2 workers — not 1099 contractors
- ✅ Enacted into law and effective for all of 2025
🚛 Are Truck Drivers Eligible?
👷♂️ W-2 Company Drivers
If you’re a company driver and paid by the hour, you likely qualify.
Example: 20 hours of OT in a week? That extra pay won’t be taxed federally.
However, many carriers pay drivers by the mile or load — which may disqualify them from the exemption unless it’s logged separately as OT pay.
🧾 1099 Owner-Operators
If you’re self-employed, leased-on, or receiving a 1099 — this provision does not apply. You’re considered a contractor, not an hourly worker.
🧠 But Wait — There’s the FLSA Motor Carrier Exemption
Even if you’re hourly, the Fair Labor Standards Act (FLSA) may exclude you from federal overtime protections under the Motor Carrier Exemption.
📌 This means that even if you’re paid OT, it may not be protected under standard federal labor rules — which could impact how it’s reported for taxes.
📊 How Much Could This Save?
If eligible, this exemption could mean:
- 💵 Tax-free income on 10–20 OT hours per week
- 💰 Roughly $1,500–$2,000/year in savings, depending on rate
🔗 Joint Committee on Taxation estimates here
✅ What Should Truckers Do Now?
- 📞 Ask your payroll department how your OT is classified
- 📂 Keep pay stubs showing OT as a separate line item
- 🧑💼 Talk to your tax professional to see if this applies in your case
Even if this doesn’t apply to you — you might qualify for CDL training credits or other deductions. Don’t sleep on the savings!
🧱 Final Word
This tax change is real — and starts with the 2025 tax year. If you’re an hourly W‑2 driver logging overtime, you could keep more of what you earn.
If you’re a 1099 contractor, this one doesn’t apply — but keep tracking your business expenses and deductions.
