Your Information
Your Overtime Tax Savings
Tax Comparison
| Item | Amount |
|---|---|
| Taxable Income (without deduction) | $0 |
| Overtime Deduction | -$0 |
| Taxable Income (with deduction) | $0 |
| Est. Tax Without Deduction | $0 |
| Est. Tax With Deduction | $0 |
| Your Tax Savings | $0 |
File Your Taxes & Claim This Deduction
Use tax software that supports the OBBBA overtime deduction to maximize your refund.
Frequently Asked Questions
Who qualifies for the no tax on overtime deduction?
FLSA nonexempt employees who receive legally required overtime premium pay qualify. This typically includes hourly workers who are entitled to time-and-a-half pay for hours worked beyond 40 per week. Independent contractors, self-employed individuals, and salaried exempt employees (those exempt from FLSA overtime requirements) do not qualify.
Additionally, your Modified Adjusted Gross Income (MAGI) must be below $150,000 (single, MFS, or HoH) or $300,000 (married filing jointly) to receive the full deduction. The deduction phases out above these thresholds.
How much overtime pay can I deduct?
You can deduct up to $12,500 per year ($25,000 if married filing jointly) of qualifying overtime premium pay. Importantly, only the premium portion of overtime pay qualifies — that is the extra 0.5x on top of your regular rate. For example, if you earn $20/hr and work overtime at $30/hr, only the $10/hr premium portion counts toward the deduction, not the full $30.
Does the no tax on overtime apply to salaried workers?
Generally, no. The deduction is specifically for FLSA nonexempt employees who are legally entitled to overtime premium pay. Most salaried employees classified as "exempt" under the FLSA do not qualify. However, some salaried workers who are classified as nonexempt (and therefore receive overtime pay) may be eligible. Check your FLSA classification with your employer or HR department.
When does the overtime tax deduction expire?
The overtime tax deduction under the One Big Beautiful Bill Act (OBBBA) is available for tax years 2025 through 2028. Unless Congress extends the provision, it will expire after the 2028 tax year. Plan your finances accordingly and take advantage of this deduction while it is available.
How do I claim the overtime tax deduction?
The overtime tax deduction is an above-the-line deduction, meaning you can claim it even if you take the standard deduction. Your employer should report your qualifying overtime premium pay on your W-2 or a supplemental statement. When filing your federal return, enter the deductible amount on the appropriate line of Form 1040. Major tax software like TurboTax, TaxAct, and H&R Block should include support for this deduction.
