No Tax on Overtime Calculator
An overtime tax calculator for the federal no-tax-on-overtime deduction: the qualified overtime premium, the $12,500 cap, the income phase-out, and roughly what it saves you in tax.
Your overtime
Count only hours over 40 in a workweek. The premium is half your regular rate for each of those hours.
The full time-and-a-half overtime pay from your pay stubs. One third of it is the premium.
The amount your employer reports as qualified overtime, for example in box 14 of your W-2 or on a separate statement.
Single includes head of household. For most people, MAGI is the same as adjusted gross income. Use your top federal bracket: 10, 12, 22, 24, 32, 35 or 37%. Married filing separately cannot claim this deduction.
| Qualified overtime premium | $3,750 |
|---|---|
| Annual limit for your filing status | $12,500 |
| After the limit | $3,750 |
| Income phase-out | $0 |
| Deduction | $3,750 |
Show the math
An estimate of a federal deduction, based only on the values you enter. It is not tax advice. Check the Schedule 1-A instructions or a tax professional before you file.
Free · No signup · Calculations stay in your browser. How we calculate
For tax years 2025 to 2028 you can deduct the premium part of overtime the FLSA requires, generally the "half" of time and a half. The deduction is capped at $12,500 ($25,000 married filing jointly) and drops by $100 for every full $1,000 of income over $150,000 ($300,000 joint). You claim it on Schedule 1-A.
On this page
How the deduction is worked out
The calculator follows the same steps as Part III of Schedule 1-A (Form 1040):
- Find your qualified overtime premium. This is the pay above your regular rate for overtime the FLSA requires, generally half your rate for each hour over 40 in a workweek.
- Apply the limit. Use the smaller of your premium or $12,500 ($25,000 if married filing jointly).
- Check the income phase-out. Take your modified adjusted gross income minus $150,000 ($300,000 joint). Divide by $1,000, drop any fraction, and multiply by $100.
- Subtract. The limited premium minus the phase-out amount is your deduction. If the result is below zero, the deduction is zero.
Worked example with the phase-out
A single filer has $12,500 of qualified overtime premium and a MAGI of $160,500. That is $10,500 over the $150,000 line. $10,500 ÷ $1,000 = 10.5, which rounds down to 10, and 10 × $100 = $1,000. The deduction is $12,500 − $1,000 = $11,500. In the 24% bracket, that cuts federal income tax by about $2,760.
What counts as qualified overtime
The deduction covers overtime the Fair Labor Standards Act requires: at least 1.5 times your regular rate for hours over 40 in a workweek. Only the premium counts, not the whole overtime check. At $20 an hour, an overtime hour pays $30. $20 of that is straight time and $10 is the premium, so 200 overtime hours in a year give you $2,000 of qualified overtime.
If you are paid more than the federal minimum, such as double time, or overtime under a state daily rule or a union contract, the extra beyond what the FLSA requires generally does not count. Employees who are exempt from overtime, such as many salaried managers and professionals, have no qualified overtime to deduct.
Not sure what your overtime adds up to? The overtime calculator shows your weekly pay and the yearly overtime premium from your hours.
Who can claim it
- It applies to tax years 2025 through 2028.
- The person who received the overtime needs a Social Security number valid for employment.
- If you are married, you must file a joint return.
- You can claim it whether you take the standard deduction or itemize.
- The overtime has to be reported to you on a W-2, a 1099 or another statement the IRS accepts.
Do you still pay taxes on overtime?
Yes. "No tax on overtime" does not mean your overtime is tax-free:
- Federal income tax is still withheld from your overtime when you are paid. The deduction comes later, when you file your return.
- Social Security and Medicare still apply to all of your overtime pay. The deduction does not reduce them.
- State income tax depends on your state. Some states follow the federal deduction and some do not, so check your state tax agency.
- Only the premium is deducted, not the whole overtime check. The straight-time part of each overtime hour is taxed as normal.
It is a federal income tax deduction, so it lowers your taxable income, not your tax bill dollar for dollar. A $3,000 deduction saves about $360 in the 12% bracket and $660 in the 22% bracket. The tax saved shown above is a rough figure: your deduction times the bracket you enter. A large deduction that crosses into a lower bracket will save a little less.
Sources & data as of November 2026
- IRS — What to know about the No Tax on Overtime deduction
- IRS — Questions and answers about the deduction for qualified overtime compensation
- IRS — Schedule 1-A (Form 1040), Part III: No Tax on Overtime
Rules checked against these IRS pages and the 2025 Schedule 1-A in October 2026. Tax rules can change, so confirm the current form before you file.
Frequently asked questions
Is overtime tax-free now?
Not completely. Your overtime is still taxed when you are paid, and Social Security and Medicare still apply. What changed is that, for tax years 2025 to 2028, you can deduct the premium part of qualified overtime when you file, which lowers your federal taxable income.
How much of my overtime can I deduct?
Only the premium, meaning the pay above your regular rate that the FLSA requires. With time and a half that is the extra half: at $24 an hour, each overtime hour pays $36, and $12 of it is the deductible premium. The deduction is capped at $12,500 a year, or $25,000 on a joint return.
How does the income phase-out work?
If your modified adjusted gross income is over $150,000 ($300,000 joint), the deduction drops by $100 for every full $1,000 over that line. Partial thousands are dropped, so $10,500 over counts as 10, and the deduction falls by $1,000.
Where do I find my qualified overtime amount?
For 2025, employers did not have to report it separately. Some show it in box 14 of the W-2, on an online portal or on a separate statement. If yours does not, the IRS allows other reasonable methods, such as working it out from your pay stubs. This calculator can do that from your hours or your total overtime pay. From tax year 2026, employers must report qualified overtime separately, and the IRS is updating the W-2 and 1099 forms to show it.
Will no tax on overtime increase my tax refund?
Usually, yes. Tax is still withheld from your overtime during the year, and the deduction is claimed when you file. So the saving normally shows up as a bigger refund or a smaller amount owed, unless you lowered your withholding on Form W-4. The tax saved figure above is a rough guide to how much.
Do I need to itemize to claim it?
No. The deduction is available whether you take the standard deduction or itemize. You claim it on Schedule 1-A of Form 1040. If you are married you must file jointly, and the person who earned the overtime needs a Social Security number valid for employment.
Does double time or state overtime count?
Only the part the federal FLSA requires counts. That is generally half your regular rate for hours over 40 in a workweek. If you are paid double time for those hours, only the first half of the premium qualifies. Overtime paid only because of state law, a contract or company policy, such as California daily overtime in a week under 40 hours, generally does not.