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.
| 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.
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.
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
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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