WASHINGTON FARM EMPLOYEES DON’T MEET QUALIFICATIONS FOR OVERTIME DEDUCTION INCLUDED IN ONE BIG BEAUTIFUL BILL

Included in the One Big Beautiful Bill is a provision allowing employees a deduction for qualified overtime pay up to $12,500.00 for individuals and $25,000.00 for married couples. Some Washington farm employees don’t meet the qualifications for this deduction because they are not receiving overtime pay in excess of regular rates under the Fair Labor Standards Act (FLSA).

In the provision, the definition of qualified overtime pay is the amount of overtime paid in excess of regular rates and under the FLSA of 1938 Section 7 sets the requirement that required overtime is in excess of regular rates. California, Oregon, and Washington are required to pay overtime at time and a half rates but aren’t required to make these payments under FLSA which excludes employees from using the deduction. This interpretation is based on the actual reading of the new tax code, but the Internal Revenue Service (IRS) may choose to write new law to interpret this differently.