A notable win is tucked inside the recently passed “Big Beautiful Bill Act” for U.S. Customs and Border Protection (CBP) Officers: federal taxes will no longer apply to a substantial portion of their overtime pay.
Section 70202 of the legislation—titled “No Tax on Overtime”—introduces a new tax deduction aimed specifically at “qualified overtime compensation.” Under this provision, single filers can deduct up to $12,500 in qualifying overtime earnings from their taxable income each year. For those filing jointly, the cap rises to $25,000.
For CBP officers, who routinely log long hours protecting U.S. borders and facilitating lawful trade and travel, this could translate into serious savings. Many officers are eligible to earn up to $45,000 in overtime pay annually, often at enhanced rates of 1.5 to 2 times their regular hourly wage. The new deduction means that a significant chunk of that income could now be shielded from federal income taxes.
The Department of the Treasury will be responsible for issuing regulations that define how this overtime pay must be recorded and reported for tax purposes. Until then, CBP officers and other eligible federal employees are keeping a close eye on how the rules will take shape.
(AI was used in part to facilitate this article.)
