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No Tax on Overtime Calculator 2026

Your no-tax-on-overtime deduction for 2025–2028: only the FLSA premium (the half in time-and-a-half) counts, capped at $12,500 / $25,000 with a $150,000 / $300,000 phase-out — hours, W-2 figure, federal tax saved and hours needed to max it.

✅ Figures verified. The $12,500 / $25,000 cap, the $150,000 / $300,000 phase-out and the $100-per-$1,000 reduction confirmed against IRC §225 (P.L. 119-21) and the IRS OBBBA deductions page on 8 October 2026; only the FLSA premium ("half") portion counts, per IRS guidance.
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Total overtime pay—
Qualified overtime (premium portion only)—
Modified AGI—
Cap for your filing status—
Phase-out reduction—
Overtime deduction (Schedule 1-A)—
Federal income tax saved—
Overtime hours needed to max the deduction—

In short

For 2025–2028, only the premium part of FLSA overtime — the half in time-and-a-half — is deductible from federal income tax, up to $12,500 ($25,000 joint), reduced by $100 per $1,000 of MAGI over $150,000 ($300,000 joint). At $30 an hour, 400 overtime hours give a $6,000 deduction worth about $1,320 in the 22% bracket; payroll tax and state tax still apply.

Who this is for: Hourly US workers who earn FLSA overtime and want to know what the deduction is actually worth.

Not tax or legal advice. Federal income tax only; FLSA eligibility depends on your job classification. State conformity varies.
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How the overtime deduction really works

  • Only the premium counts. At time-and-a-half, one-third of your overtime pay is the "half" premium and that is all you can deduct. $45/hour overtime on a $30 base: $15 of each hour qualifies.
  • Cap: $12,500 ($25,000 joint) per year for 2025–2028 — at a $30 base rate that takes about 833 overtime hours, so most workers deduct well below the cap.
  • Phase-out: $100 for each $1,000 of MAGI over $150,000 ($300,000 joint).
  • FLSA only: overtime your employer pays voluntarily, or under state law for a 9th hour in a day, does not qualify unless the FLSA also required it (over 40 hours in the week).
  • Payroll tax unchanged: Social Security and Medicare are still withheld on the full overtime amount, as is state income tax in most states.
  • Where to claim: Schedule 1-A with Form 1040, using the figure your employer reports.

See also: No Tax on Tips Calculator 2026.

Sources: IRC §225; IRS — OBBBA deductions for working Americans and seniors; IRS — How to take advantage of no tax on tips and overtime. Checked 8 October 2026.

Assumptions

  • Qualified overtime = hours × rate × (multiplier − 1), the premium above the regular rate; or the W-2 figure if entered.
  • Cap $12,500 ($25,000 joint); reduced by $100 per $1,000 of MAGI above $150,000 ($300,000 joint).
  • Tax saved from the 2026 brackets after the standard deduction.

Worked example

Single, $30 an hour, 400 overtime hours at time-and-a-half, $62,400 of regular wages

Overtime pay $18,000, of which the premium is $6,000 (400 × $15). MAGI $80,400 — no phase-out — so the deduction is $6,000, under the $12,500 cap. Taxable income drops from $64,300 to $58,300 and federal tax by about $1,320 (22% bracket). FICA of $1,377 on the overtime still applies. Maxing the $12,500 cap at this rate would take about 833 overtime hours a year.

Frequently asked questions

Is overtime pay tax-free now?

No — only the premium portion (the "half" of time-and-a-half) is deductible from federal income tax, up to $12,500 ($25,000 joint), for 2025–2028. The base-rate part, FICA and state taxes are unchanged.

Does double-time count?

The premium over your regular rate counts, so at double time half of the overtime pay qualifies — but only if the FLSA required the overtime.

I am salaried — do I qualify?

Only if you are non-exempt under the FLSA and actually receive overtime pay. Exempt salaried employees have no qualified overtime.

Will my paycheck change?

Not in 2025 — withholding was not adjusted, so the benefit arrives as a larger refund. Employers may adjust withholding from 2026.

Does state-mandated daily overtime count?

Only the portion the federal FLSA also requires — hours over 40 in the week. Daily overtime under California-style rules is not qualified unless it also exceeds 40 weekly hours.

What does my employer report?

From 2026, employers report qualified overtime in a dedicated W-2 box; for 2025 it appears in box 14 or on a separate statement.

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Written by the Swift IT Sols editorial team · SWIFT SOLSRules sourced from the official authorities named on this page and last checked How we source and check calculators

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