This bill matters because it could put more money directly into the pockets of individuals who are working multiple jobs, potentially making it easier for them to manage rising costs of living or save for the future. By making secondary job income tax-free for a period, it might encourage more people to take on extra work, thus potentially increasing labor supply.
If this bill becomes law, eligible workers could see a noticeable increase in their take-home pay from their second jobs. If it does not pass, these earnings will continue to be fully subject to federal income and payroll taxes, meaning workers keep less of what they earn from their additional efforts.
KEY PROVISIONS
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PROVISION 01
Excludes compensation from secondary employment from federal income tax and payroll taxes.
This directly increases the take-home pay for eligible individuals working a second job.
PROVISION 02
Defines "secondary employment" as compensation from an employer other than a "primary employer" where an individual worked at least 2080 hourly hours in a taxable year.
This provision clarifies which types of multiple-job workers are eligible for the tax break.
PROVISION 03
Includes a phase-out for the tax exclusion, starting at $100,000 modified adjusted gross income (MAGI) for single filers and $150,000 for married couples filing jointly, disappearing completely at $150,000 and $200,000 respectively.
This ensures the tax benefit is targeted towards middle and upper-middle income earners rather than the wealthiest individuals.
PROVISION 04
Mandates that amounts equivalent to the revenue reduction for Social Security and Medicare trust funds are transferred from the general fund.
This prevents the tax break from negatively impacting the solvency of these important entitlement programs.
PROVISION 05
Includes a sunset clause, meaning the tax exclusion will expire five years after the bill's enactment.
This makes the tax relief temporary, requiring future legislative action if it is to continue beyond the five-year period.
This bill matters because it could put more money directly into the pockets of individuals who are working multiple jobs, potentially making it easier for them to manage rising costs of living or save for the future. By making secondary job income tax-free for a period, it might encourage more people to take on extra work, thus potentially increasing labor supply.
If this bill becomes law, eligible workers could see a noticeable increase in their take-home pay from their second jobs. If it does not pass, these earnings will continue to be fully subject to federal income and payroll taxes, meaning workers keep less of what they earn from their additional efforts.
KEY PROVISIONS
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high
Excludes compensation from secondary employment from federal income tax and payroll taxes.
This directly increases the take-home pay for eligible individuals working a second job.
med
Defines "secondary employment" as compensation from an employer other than a "primary employer" where an individual worked at least 2080 hourly hours in a taxable year.
This provision clarifies which types of multiple-job workers are eligible for the tax break.
high
Includes a phase-out for the tax exclusion, starting at $100,000 modified adjusted gross income (MAGI) for single filers and $150,000 for married couples filing jointly, disappearing completely at $150,000 and $200,000 respectively.
This ensures the tax benefit is targeted towards middle and upper-middle income earners rather than the wealthiest individuals.
med
Mandates that amounts equivalent to the revenue reduction for Social Security and Medicare trust funds are transferred from the general fund.
This prevents the tax break from negatively impacting the solvency of these important entitlement programs.
med
Includes a sunset clause, meaning the tax exclusion will expire five years after the bill's enactment.
This makes the tax relief temporary, requiring future legislative action if it is to continue beyond the five-year period.
Federal Old-Age and Survivors Insurance Trust Fund, the Federal Disability Insurance Trust Fund, and the Federal Hospital Insurance Trust Fund
mandatory
Ongoing for the duration of the tax exclusion (5 years)
GLOSSARY
AI-written
Internal Revenue Code of 1986
The primary collection of tax laws in the United States.
Gross Income
All income a person receives from any source, before any deductions or exclusions are applied.
Secondary Employment Compensation
Money earned from a job that is not an individual's main full-time hourly job.
Primary Employer
An employer designated by a taxpayer where they work at least 2080 hours annually (roughly 40 hours per week for a year) and are compensated on an hourly basis.
Modified Adjusted Gross Income (MAGI)
A specific calculation of a person's income used to determine eligibility for certain tax benefits or deductions.
Payroll Taxes
Taxes deducted from an employee's paycheck, such as Social Security and Medicare taxes, which fund specific government programs.
Sunset Clause
A provision in a law that specifies an automatic expiration date, meaning the law will no longer be in effect after that date unless renewed by new legislation.
ACTION TIMELINE
2 EVENTS
JAN 20, 25
Introduced in House
INTROREFERRAL
JAN 20, 25
Referred to the House Committee on Ways and Means.
