Estimate the US federal “no tax on overtime” deduction for tax years 2025–2028. It's based on the qualified overtime premium, your filing status and the income phase-out. Overtime is not tax-free; this is a deduction from taxable income.
US federal income tax only. This does not reduce Social Security, Medicare or state taxes, and it
is an estimate, not tax advice.
Qualified overtime
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Your limit
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Estimated deduction
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Approx. federal tax saving
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How to use the no tax on overtime calculator
Choose the tax year and your filing status.
Enter your qualified overtime amount (W-2 box 12, code TT), or estimate it from your FLSA overtime hours and regular rate.
Enter your estimated MAGI to apply the income phase-out.
Read the estimated deduction and, if you pick a marginal tax rate, an approximate federal income tax saving.
How the deduction is calculated
Qualified overtime = the FLSA-required premium only. At time and a half, that is overtime hours × ½ × regular rate.
Limit = $12,500 ($25,000 married filing jointly), reduced by $100 for each $1,000 of MAGI over $150,000 ($300,000 joint).
Deduction = the smaller of your qualified overtime and your limit.
Example
A single filer earning $24/h works 300 FLSA overtime hours in the year. They were paid 300 × $36 = $10,800 of
overtime pay, but the qualified amount is only the premium: 300 × $12 = $3,600. With MAGI of $65,000
(below the phase-out), the deduction is $3,600. At a 12% marginal rate, that lowers federal income tax by roughly
$432.
Important limits
Available for tax years 2025 through 2028 only.
Requires a valid Social Security number. Married couples must file jointly.
Claimed on Schedule 1-A, whether or not you itemize.
Overtime required only by state law or a contract (beyond the FLSA) generally doesn't qualify.
Your employer keeps withholding normally. The 2026 Form W-4 lets you account for an expected deduction.
No. Overtime is still taxable wages. For tax years 2025–2028, eligible US workers can claim a federal income tax deduction for part of their overtime pay (the “qualified overtime compensation”). Social Security, Medicare and state income taxes still apply, and withholding continues as normal.
What counts as qualified overtime compensation?
Only the premium part of overtime that the federal Fair Labor Standards Act requires: the extra amount above your regular rate. If you are paid time and a half, that is the “half”. Overtime required only by state law or a union contract (for example California daily overtime) generally does not count, and neither does overtime paid voluntarily to FLSA-exempt employees.
How much can I deduct?
Up to $12,500 a year, or $25,000 if married filing jointly. The limit is reduced by $100 for every $1,000 of modified adjusted gross income (MAGI) above $150,000 ($300,000 for joint filers).
Who cannot claim it?
Married people filing separately, people without a valid Social Security number, and generally workers whose overtime is not required by the FLSA (such as exempt executive, administrative and professional employees). It is not available for tax years after 2028.
Where do I find my qualified overtime amount?
From 2026, employers report it on Form W-2 in box 12 with code TT. For 2025, employers were not required to report it separately, and the IRS Schedule 1-A instructions explain how to work it out. The deduction is claimed on Schedule 1-A.
How accurate is the tax saving estimate?
It is a rough guide: deduction × the marginal federal tax rate you choose. Your real saving depends on your whole return. Use tax software or a tax professional for the exact figure.