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No Tax on Overtime Calculator

From 2025 through 2028, workers paid overtime under federal law can deduct the extra half of their time-and-a-half pay, up to $12,500 a year ($25,000 on a joint return). Enter your overtime and income to see your deduction and roughly what it saves you.

$

For most people this is your AGI (Form 1040, line 11b).

How do you want to enter your overtime?

Hours over 40 in a workweek.

$

Your normal rate, not the overtime rate.

Your top income tax rate. Used only for the savings estimate.

Your deduction$3,500Cuts your federal income tax by about $420 at 12%.
Overtime premium (hours × rate × 0.5)
$3,500
Premium that counts (up to $12,500)
$3,500
Income phase-out
$0
Deduction (Schedule 1-A, line 21)
$3,500

Only overtime the federal Fair Labor Standards Act requires counts, so pay above time-and-a-half and state-only overtime don't. Social Security and Medicare taxes still apply.

How the deduction works

The deduction is claimed on the new Schedule 1-A and lowers your taxable income, whether you take the standard deduction or itemize. Only the premium part of your overtime counts: the "half" in time-and-a-half. If your regular rate is $28 an hour, each overtime hour pays $42 and $14 of it is qualified overtime.

The deduction is capped at $12,500 per return, or $25,000 on a joint return (a combined limit, not per spouse). Above $150,000 of modified adjusted gross income ($300,000 for joint returns), it shrinks by $100 for every full $1,000 over the line. Married couples must file jointly to claim it.

Example: a single filer has $14,000 of overtime premium and $172,500 of income. The premium is capped at $12,500. Income is $22,500 over the line, which is 22 full $1,000 steps, so the deduction drops by $2,200 to $10,300.

What counts as qualified overtime

It has to be overtime the Fair Labor Standards Act (FLSA) requires, which generally means pay for hours over 40 in a workweek, paid to an employee who is covered by the FLSA and not exempt from its overtime rules. Common exemptions include many executive, administrative and professional employees, so their overtime does not qualify.

Extra pay above time-and-a-half (for example, the extra in double time), weekend or holiday premiums when you did not work more than 40 hours, overtime that only state law or a union contract requires, and tips are not qualified overtime. You (or your spouse, if the overtime is theirs) need a Social Security number that is valid for work.

Finding your overtime premium

Starting with 2026, employers report qualified overtime on Form W-2, box 12, code TT, and you can deduct only the amount reported there. For 2025, employers did not have to report it separately, so the IRS lets you use your pay stubs or an employer statement.

If a statement shows the total paid for overtime hours at time-and-a-half, divide it by three. If it shows nothing, multiply your overtime hours by your regular rate and by 0.5. This calculator does either for you.

Questions

Is overtime pay tax free now?

No. You can deduct only the premium part, the extra half of time-and-a-half, up to $12,500 ($25,000 joint). The rest of your overtime pay is taxed as usual.

Do I still pay Social Security and Medicare tax on overtime?

Yes. The deduction only lowers federal income tax. Payroll taxes on your overtime stay the same.

Can married couples filing separately claim it?

No. If you are married, you must file a joint return to claim the overtime deduction.

I get double time. How much counts?

Only the half that the FLSA requires. If you were paid $20,000 at double time, your regular pay for those hours is $10,000, time-and-a-half would be $15,000, and $5,000 counts.

Do I have to itemize to claim it?

No. It is claimed on Schedule 1-A and works with the standard deduction too.

Does everyone who gets overtime qualify?

No. You must be covered by the FLSA and not exempt from its overtime rules. Many executive, administrative, professional and outside sales jobs are exempt, so ask your employer whether you are FLSA nonexempt.

How long does the deduction last?

It applies to tax years 2025 through 2028 and ends after 2028 unless Congress extends it.

Sources

Updated November 3, 2026. Estimates only, not tax or financial advice.

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