OCTOBER 28, 2025 – As an equipment dealer, you may be wondering how the new One Big Beautiful Bill (OBBB) affects overtime pay and related tax deductions for your employees. 

Step 1: Does the Federal Overtime Law Apply to Your Employees? 

Before the OBBB comes into play, first determine whether your dealership is covered by the Fair Labor Standards Act (FLSA) overtime rules. 

Under 29 C.F.R. § 213(b)(10)(A), certain employees are exempt from FLSA overtime pay if both of the following apply: 

  1. Your business is a non-manufacturing dealership primarily engaged in selling automobiles, trucks, or farm implements to retail customers (more than 50% of your annual sales come from those products). 
  2. Your employees – salespeople, parts personnel, and mechanics – spend more than half their time selling or servicing those same products for retail customers. 

If both are true: Your dealership is not required to pay overtime to those employees under federal law. You can still choose to offer overtime as part of your overall pay structure. 

Step 2: How the OBBB Affects Overtime Tax Deductions 

The OBBB introduced a new tax deduction – but it only applies to overtime pay that’s required under the FLSA. 

  • If your dealership is covered by FLSA overtime rules, your employees may be eligible for the new overtime tax deduction. 
  • If your dealership is exempt (as most auto, truck, and farm implement dealers are), your sales, parts, and mechanic employees will not qualify for this deduction. 

Whether your employees are covered by FLSA, there is no change to payroll or reporting of overtime wages. 

Key Takeaways for Dealers 

  • Determine your FLSA status – that determines OBBB deduction ability for your employees. 
  • No new reporting required – continue your current payroll practices. 
  • Future changes are possible – but not before late 2026. 

Questions? 

If you have questions about how the OBBB or FLSA applies to your dealership, consult your accountant, tax advisor, or legal counsel to confirm your specific situation. 

Woods Aitken Law Firm is a trusted law partner for INEDA members and is available at (855) 277-5575.