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Tax years 2025–2028

No Tax on Overtime Calculator

Find out how much of your overtime you can deduct from federal income tax. Only the FLSA overtime premium counts — up to $12,500 ($25,000 joint), reduced once income passes $150,000 ($300,000 joint).

Use this calculator when

  • You are an hourly or salaried non-exempt employee under the FLSA
  • You were paid overtime the FLSA requires (hours over 40 in a workweek)
  • You want the deduction for tax years 2025, 2026, 2027 or 2028
  • You file single, head of household, or married filing jointly
Wrong fit?Not sure whether you are FLSA non-exempt? Check that first — exempt employees cannot claim this deduction.Exempt vs. Non-Exempt Wizard

Calculator

Deduction for the FLSA overtime premium under 26 U.S.C. §225, following IRS Schedule 1-A, Part III.

How do you know your overtime amount?

Your overtime deduction (2026)

$3,000.00

≈ $360.00 less federal income tax at a 12% bracket

Qualified overtime
$3,000.00
FLSA premium only
After limit
$3,000.00
Limit $12,500.00
Income phase-out
− $0.00
Above $150,000.00
Deduction
$3,000.00

Estimated 2026 overtime deduction: $3,000.00. Qualified overtime (FLSA premium only): $3,000.00; capped at $3,000.00. At a 12% bracket that is about $360.00 less federal income tax.

From tax year 2026 you may deduct only the amount your employer reports in Form W-2, box 12, code TT. Treat this result as an estimate and check it against your W-2.

This is a federal income tax deduction only. It does not reduce Social Security or Medicare taxes, and state income tax treatment depends on your state. Overtime paid only because of state law, a union contract or employer policy does not qualify. Not tax advice — confirm with the IRS instructions or a tax professional.

Formula (Schedule 1-A, Part III)

qualified_overtime = FLSA premium above the regular rate
paid at 1.5× → total_overtime ÷ 3 · paid at 2× → total_overtime ÷ 4
capped = min(qualified_overtime, 12,500 | 25,000 joint)
excess = max(0, MAGI − 150,000 | 300,000 joint)
reduction = floor(excess ÷ 1,000) × 100
deduction = max(0, capped − reduction)

The phase-out uses whole thousands only: Schedule 1-A tells you to divide the excess by $1,000 and decrease the result to the next lower whole number before multiplying by $100.

Worked examples

Warehouse worker, single

  1. Overtime paid at 1.5×: $9,000
  2. Premium share: $9,000 ÷ 3 = $3,000
  3. MAGI $65,000 — below $150,000, no reduction
  4. Deduction: $3,000
  5. At a 12% bracket ≈ $360 less income tax

High earner hitting the phase-out

  1. Qualified overtime: $14,000 → limited to $12,500
  2. MAGI $175,500 − $150,000 = $25,500 excess
  3. $25,500 ÷ $1,000 = 25.5 → 25
  4. Reduction: 25 × $100 = $2,500
  5. Deduction: $12,500 − $2,500 = $10,000

Frequently asked questions

Is all of my overtime pay tax-free?

No. Only the part of overtime pay above your regular rate — the “half” in time-and-a-half — is deductible, and only when the Fair Labor Standards Act requires that overtime. If you earned $15,000 of overtime at 1.5×, the deductible amount is $5,000.

How much can I deduct?

Up to $12,500 a year, or $25,000 on a joint return. The limit is reduced by $100 for each full $1,000 of modified adjusted gross income above $150,000 ($300,000 joint), so it disappears completely at $275,000 single or $550,000 joint.

Which years does it cover?

Tax years 2025 through 2028. No deduction is allowed for tax years beginning after December 31, 2028.

Do I need to itemize?

No. The IRS says the deduction is available whether you itemize or take the standard deduction. It is computed on Schedule 1-A of Form 1040.

Where do I find my qualified overtime amount?

From tax year 2026, employers report it on Form W-2, box 12, code TT, and you may deduct only that reported amount. If it looks too low, ask your employer for a corrected W-2. For 2025 employers were not required to report it separately, and IRS Notice 2025-69 explained how employees could work it out themselves.

Does overtime required by state law count?

Not on its own. The IRS says overtime not required by the FLSA is not eligible. Premiums paid only because of a state rule (such as California daily overtime), a union contract or company policy do not qualify unless the FLSA also requires them.

What if I am paid double time?

Only the FLSA-required premium of half your regular rate qualifies. In the IRS example, $20,000 of double-time overtime yields a $5,000 deduction — one-fourth of the total.

Does it lower Social Security and Medicare taxes?

No. It is a federal income tax deduction. Overtime is still wages for employment tax purposes, so Social Security and Medicare are withheld as usual.

Can married couples filing separately claim it?

No. A married taxpayer can claim the deduction only on a joint return, and a valid Social Security number must be on the return.

Sources

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