No Tax on Overtime Calculator (2025–2028)
The overtime deduction covers only the premium portion of overtime pay — the extra half in time-and-a-half — up to $12,500 ($25,000 joint). Most calculators get this wrong.
Last updated: October 20, 2026
Filing this year? Tax software applies these deductions to your real return. Compare free-filing options.We may earn a commission from links on this page, at no cost to you.
Compare tax software →How it works
- Only the premium qualifies. At $20/hour, 10 overtime hours at $30 = $300 pay, but only $100 is deductible. IRC §225(c)
- Cap: $12,500 per return ($25,000 married filing jointly), tax years 2025–2028.
- Phase-out: $100 per $1,000 of MAGI above $150,000 / $300,000.
- FLSA overtime only — overtime required by Section 7 of the Fair Labor Standards Act. Employers report it separately on the W-2. IRS Notice 2025-69
FAQ
Why is my deduction smaller than my overtime pay?
The law only exempts the premium above your regular rate. Your regular-rate portion of overtime hours is still taxed.
Does double-time count?
Only the portion required under FLSA (generally 1.5×) is qualified. Contractual double-time may exceed what qualifies.
Are salaried exempt employees eligible?
Generally no. FLSA-exempt employees are not entitled to FLSA overtime, so it does not qualify.
Is overtime still subject to payroll tax?
Yes, Social Security and Medicare still apply.
Do I need to itemize?
No. It is claimed on Schedule 1-A with the standard deduction.
What about state taxes?
Federal only. A few states have proposed similar rules; check your state.
Methodology
overtime pay = hours × weeks × regular rate × multiplier; premium = overtime pay − hours × weeks × regular rate; deduction = min(premium, cap) − 100 × ⌊max(0, MAGI − threshold) / 1000⌋, floor $0. Schedule 1-A line 19 rounds a fractional $1,000 down. Tax saving uses the shared exact bracket walk. MAGI is treated as AGI. Head of household uses single-filer brackets; married filing separately is not supported.Sources: IRC §225 (Pub. L. 119-21 §70202); 29 U.S.C. §207; IRS Notice 2025-69; Schedule 1-A (Form 1040) 2025 — accessed October 2026Last updated: October 20, 2026 · Reviewed against official IRS guidanceContinue with OBBBA Tax Center · double-time overtime guide · year-end W-4 guide