No Tax On Overtime Calculator

No. Overtime is still taxed. The new law gives you a deduction, not a tax exemption.⁴ You subtract part of your overtime pay from your income, which lowers your federal income tax. You still owe Medicare tax and most likely state tax on all of your overtime pay. You also owe Social Security tax on it until your wages for the year pass the Social Security wage base, $184,500 for 2026.⁵

Take your regular hourly rate and cut it in half. That half is your premium per overtime hour. Then multiply it by your overtime hours for the year.

Example: $30 an hour base pay means a $15 premium. Work 300 overtime hours and your qualified overtime is $4,500.

No. The deduction only covers the half-time premium the Fair Labor Standards Act requires.¹ At double-time you get an extra full hour of pay, but only 0.5x of it counts as qualified overtime. The rest is taxed like normal wages.

No. You can take the standard deduction and still claim the overtime deduction.² It sits on top of your standard deduction, so nearly every overtime worker can use it.

Probably not by much. Your employer keeps withholding federal tax on overtime the same way unless you give it a new Form W-4 that accounts for the deduction.¹³ The benefit usually shows up when you file your return, as a larger refund or a smaller bill. You can adjust your Form W-4 if you want more money in each check instead.⁷

For 2025, employers did not have to report qualified overtime separately.¹ Some chose to show it in Box 14 of your W-2 or on a separate statement.¹

If your 2025 W-2 does not list it, you can work it out with the methods in the IRS instructions for Schedule 1-A, using your paystubs.²

From 2026, employers must report qualified overtime separately.¹ They report it in box 12 of your W-2 with code TT.¹³ From 2026 you can deduct only the amount shown there. If your employer left it out or reported too little, ask for a corrected W-2 (Form W-2c).¹³

At the full cap, single and head of household filers lose all of it at $275,000 of MAGI, and married couples filing jointly lose all of it at $550,000. A smaller deduction is gone sooner, at the start of the phase-out plus about $10 of income for each $1 of deduction. The drop starts at $150,000 single and $300,000 joint, falling $100 for every $1,000 of income above the line.³

The law simply leaves that filing status out. If you file separately from your spouse, you get no overtime deduction at all.¹ Couples who both work overtime usually do better filing jointly, since they share a $25,000 cap.

Yes, but you share one cap. A married couple filing jointly can deduct up to $25,000 of combined qualified overtime premium.¹ If one spouse has $18,000 and the other has $9,000, you deduct $25,000, not $27,000.

Tax years 2025 through 2028.⁴ The first return you can claim it on is your 2025 return, filed in early 2026. It ends after 2028 unless Congress votes to extend it.³

Yes, in most cases. This is a federal deduction only. It carries over to state tax automatically only in a few states that start from federal taxable income. Elsewhere it applies only if your state passes a law to adopt it.¹⁴ States with no income tax, like Texas and Florida, never taxed it anyway.⁶

Only if you are non-exempt and your employer legally owes you FLSA overtime.¹ Most salaried exempt workers get no overtime pay, so they have nothing to deduct. Check your job classification on your paystub or ask HR.

No. Only the FLSA-required premium for hours worked past 40 in a workweek counts.¹ Extra overtime pay for weekend or holiday hours, for hours past 8 in a day, or under a union contract or state law counts only for the part the FLSA itself requires.¹³ Shift differentials, bonuses and on-call pay are not overtime premiums, so they do not count on their own. If the FLSA counts them in your regular rate of pay, they raise your half-time premium, because that premium is half of your regular rate.¹³

Multiply your qualified overtime premium by your tax bracket. Someone with $5,000 of premium in the 22% bracket saves about $1,100. Someone with $2,000 of premium in the 12% bracket saves about $240. The higher your bracket and your overtime hours, the bigger the savings.

Yes. You must have a valid Social Security number to claim the overtime deduction.¹ If both spouses earned qualified overtime, both need Social Security numbers valid for work, and both numbers must be on the return.¹

MAGI stands for modified adjusted gross income. For this deduction it is your adjusted gross income plus any foreign or U.S. territory income you excluded from tax.³ It is your income after certain adjustments, and it decides whether your overtime deduction phases out. Start with W-2 Box 1 wages, add other income, then subtract things like deductible IRA contributions and student loan interest.

No. Social Security tax of 6.2% (up to the yearly wage base) and Medicare tax of 1.45% still come out of your overtime pay.⁵ The deduction only applies to federal income tax. Your overtime still counts as wages for Social Security tax.¹³

Yes, if you earn both. OBBBA created separate deductions for qualified overtime and qualified tips, each with its own cap.⁴ A worker with tipped wages and overtime hours can claim both on the same return.