No Tax on Overtime Calculator
Calculate your federal tax deduction for qualified overtime compensation under the One Big Beautiful Bill Act (2025-2028).
$12,500
Max deduction (Single)
$25,000
Max deduction (Joint)
2025-2028
Tax years eligible
Calculate Your Overtime Deduction
Note: Married taxpayers must file jointly to claim this deduction.
Your AGI plus any income excluded under IRC §§ 911, 931, or 933. Phase-out begins at $150,000.
Hours worked over 40 per week (FLSA overtime).
Your FLSA regular rate of pay.
Important: This calculator provides estimates for educational purposes only and does not constitute tax, legal, or financial advice. Tax laws are complex and subject to change. The calculations shown are based on our interpretation of 26 U.S.C. §§ 224-225 and IRS guidance as of 2026. Your actual tax situation may differ. Consult a qualified tax professional for advice specific to your circumstances.
Understanding Qualified Overtime Compensation
Only the "half" counts: When you earn time-and-a-half for overtime, only the premium portion (the extra half) qualifies for the deduction. The straight-time pay for overtime hours is not deductible.
Example: You work 10 overtime hours at $20/hour. Your employer pays you $300 for those hours ($20 × 1.5 × 10). But only $100 is "qualified overtime compensation" (10 × $20 × 0.5).
Source: IRS FS-2026-13, 26 U.S.C. § 225
What is the Qualified Overtime Compensation Deduction?
The "No Tax on Overtime" provision, enacted as part of the One Big Beautiful Bill Act (P.L. 119-21), allows eligible workers to deduct their qualified overtime compensation from federal income tax. This deduction is available for tax years 2025 through 2028.
Important: Only the "premium" portion of overtime pay qualifies—the extra half of time-and-a-half. The straight-time portion of overtime hours is not deductible.
Key Rules for the Overtime Deduction
Who Qualifies
- • FLSA overtime-eligible employees (non-exempt)
- • Must have valid SSN for employment
- • Married taxpayers must file jointly
- • Overtime must be required under FLSA § 207
Deduction Limits
- • $12,500 maximum (single/HOH)
- • $25,000 maximum (married filing jointly)
- • Phase-out starts at $150k/$300k MAGI
- • Reduced by $100 per $1,000 over threshold
What Counts
- • Only the "half" of time-and-a-half
- • Must be FLSA-required overtime
- • State-only overtime doesn't count
- • Collective bargaining overtime may not count
Reporting Requirements
- • W-2 Box 12, Code TT (starting 2026)
- • Reported on Schedule 1-A (Form 1040)
- • Request W-2c if employer omits
- • Cannot use Form 4852 as substitute