b'LEGAL MATTERSLEGAL MATTERS New Overtime Tax Law: Increases Employer Recordkeeping ObligationSTEVEN E. BERS, ESQ. // PVA GENERAL COUNSELT headministrationsBigIn explanation of the deduction, forearns $27 per hour for hours worked BeautifulBillincludesa2025 through 2028, individuals whoover 40 hours in a single workweek, newovertimetaxationpro- receivequalifiedovertimecompen- can deduct from federal income tax, vision, broadly described as No Taxsation(i.e.,overtimerequiredby$9 per hour for all overtime hours. onOvertime.Moreaccurately,theFederal law for hours worked over 40 bill allows an employee tax deductionhours by non-exempt employees in aThe maximum annual deduction for ofaportionofovertimepayments,singleworkweek)maydeductfromany employee is $12,500 ($25,000 for uptoadeductionmaximum.Thefederal income taxation the pay thatjoint filers). The deduction phases out administrationofthisnewemploy- exceeds their regular rate of paysuchfor taxpayers with modified adjusted ee-benefitingtaxdeductionwillas the half portion of time-and-a-halfgross income over $150,000 ($300,000 necessarilyrequireincreasedrecordcompensation. Thus, by example, anfor joint filers).keeping by employers.employee earning $18 per hour,who The new deduction creates new and immediate record-keeping obligations for employers who will be required to track all deduction-eligible overtime, identifyingtheemployeehalf-time payments. This information will even-tually be reported each year on wage statements provided to the employee, notably the W-2 annual income state-ment,startingwiththe2025-issued W-2 form, which will now include a new overtime report category.In a statementissued on July 14, 2025, the IRS wrote: The IRS will provide transition relief for tax year 2025 for taxpayers claiming the deduction and for employers and other payors subject to the new reporting requirements.Since1990,StevenBers,Esq.,has advisedpassengervesselownerson legalmatersrelatingtomarinelaw andmarineemployment.Healso serves as PVAs General Counsel, and can be contacted at 410-347-8724 or sbers@whitefordlaw.com. FOGHORN 40'