How Does The New No Tax On Overtime Affect Electricians? 2025 News

Key Takeaways

• You can deduct up to $12,500 in overtime pay from your 2025-2028 federal taxes, potentially saving $1,400-$1,750 annually.
• The deduction applies only to the premium portion of overtime pay (the extra 50% above your regular rate).
• You must earn under $150,000 annually to qualify for the full benefit - it phases out above this amount.
• Keep detailed records of your overtime hours and pay stubs to support your tax deduction claims.
• Social Security and Medicare taxes still apply to overtime - only federal income tax is affected.

Working overtime just became more valuable for electricians. The new "no tax on overtime 2025" federal tax law lets you deduct up to $12,500 in overtime pay from your taxable income, potentially saving you $1,400 to $1,750 annually in federal taxes. This tax break applies to electrical workers, electrical technicians, journeymen electricians, and apprentices working for electrical contractors.

How Much You Could Save as an Electrician

The White House estimates qualifying electrical workers will save between $1,400 and $1,750 per year. Your actual tax savings depend on your tax bracket and how much overtime you work on electrical projects, emergency calls, and construction sites.

If you're in the 22% tax bracket and earn the full $12,500 in deductible overtime, you could save $2,750 in federal income taxes. Even at the 12% bracket, you'd save $1,500. This applies whether you work on residential electrical installations, commercial electrical systems, or industrial electrical maintenance.

Who Qualifies for This Tax Break Among Electrical Workers

Income Limits for Electricians

‍The full deduction is available if you earn less than $150,000 annually. The benefit phases out as your income rises above $150,000 and disappears completely at $275,000. Most journey-level electricians, electrical helpers, and electrical technicians will qualify.

Work Requirements for Electrical Employees

‍You must work for an employer (not as an independent electrical contractor) and receive overtime pay under the Fair Labor Standards Act. Understanding these FLSA overtime tax deduction rules helps determine if you qualify. This means time-and-a-half pay for hours worked beyond 40 in a week on electrical jobs, service calls, or construction projects.

Tax Filing Requirements

‍You need a valid Social Security number and must include it on your tax return to claim the deduction. This applies to all electrical workers receiving W-2 forms.

What Overtime Counts for Electrical Work

Only the premium portion of your overtime pay qualifies. If you normally earn $25 per hour as an electrician and get $37.50 for overtime, only the extra $12.50 per hour can be deducted.

The deduction covers overtime required by federal law for electrical work. Some state-mandated overtime or union contract overtime may not qualify if it exceeds federal requirements.

How to Claim the Deduction as an Electrician

No Itemizing Required for Electricians

‍You can claim this deduction whether you itemize or take the standard deduction. This makes it accessible even if you don't have enough other deductions like electrical tools, work uniforms, or vehicle expenses to itemize.

Tax Return Process for Electrical Employees

‍Your electrical contractor will report your qualified overtime on your W-2 form in a separate box. You'll use this information when filing your tax return to claim the deduction.

Keep Records of Your Electrical Work

‍Save your pay stubs showing overtime hours and rates from electrical projects. This documentation supports your deduction if questioned and helps track your electrical work throughout the year.

What Doesn't Change for Electricians

Paycheck Withholding from Electrical Contractors

‍Your employer still withholds federal income tax from overtime pay. You'll get the benefit as a refund when filing your tax return.

Payroll Taxes for Electrical Employees

‍Social Security and Medicare taxes still apply to all overtime earnings from electrical work. Only federal income tax is affected.

State Taxes on Electrical Workers

‍Most states will continue taxing your full overtime income from electrical work. Check your state's rules, as they may not conform to the federal change.

Maximizing Your Benefit as an Electrician

Track Your Electrical Overtime Work

‍Monitor how much overtime you work throughout the year on electrical installations, repairs, and maintenance. If you're approaching the $12,500 limit, you might want to think about how more overtime affects your overall tax situation.

Plan Your Taxes with Other Electrical Deductions

‍This deduction could lower your adjusted gross income, potentially qualifying you for other tax benefits. Consider combining with other electrical worker deductions like tool expenses, work clothing, and vehicle costs for electrical work.

Consider Multiple Electrical Jobs

‍If you work overtime at multiple electrical companies, the $12,500 limit applies to your total overtime across all electrical contractors.

When This Applies to Electrical Workers

The deduction is retroactive to January 1, 2025, and continues through the 2028 tax year. After 2028, the benefit expires unless Congress extends it.

For 2025, your electrical contractor may estimate your qualified overtime using reasonable methods as the IRS finalizes reporting procedures for electrical businesses.

Getting Professional Help for Electrical Tax Planning

Think about consulting a tax professional familiar with electrical contractor taxes, especially if you have a complex tax situation or multiple income sources. They can help you maximize this benefit and plan for the temporary nature of the deduction when considering other electrical worker tax deductions.

Important Tax Disclaimer

This information is for educational purposes and reflects the current understanding of the One Big Beautiful Bill Act as of July 2025. Tax situations vary by individual circumstances. Consult with a qualified tax professional before making financial decisions based on this information.