No tax on overtime calculator
From 2025 to 2028, workers can deduct the premium part of required overtime pay, the extra half in time-and-a-half, up to $12,500 a year or $25,000 for joint filers. The deduction shrinks above $150,000 of income, or $300,000 joint. Enter your rate and overtime hours to see the deduction and tax saved.
Updated November 2026
Calculator
Counts only the overtime premium (the half in time-and-a-half) required by federal law. 2025 to 2028. State tax not included. An estimate, not tax advice.
What overtime counts for the deduction?
Only the premium portion of overtime that federal law (the Fair Labor Standards Act) requires: the extra half of pay for hours over 40 in a workweek. If you earn $30 an hour and work time and a half, $15 of each overtime hour qualifies. The base $30 doesn't. Overtime paid only because of a union contract or a state rule, beyond what federal law requires, generally doesn't count.
How much can I deduct?
| Item | Single | Married filing jointly |
|---|---|---|
| Yearly cap | $12,500 | $25,000 |
| Phase-out starts | $150,000 of modified AGI | $300,000 of modified AGI |
| Reduction | $100 for each $1,000 over | $100 for each $1,000 over |
| Years | 2025 to 2028 | 2025 to 2028 |
You can claim it whether or not you itemize. It lowers federal income tax only. Social Security and Medicare still come out of overtime pay, and state taxes may not follow the federal rule.
How do I claim it?
Employers report qualified overtime on your W-2. You claim the deduction on your Form 1040, or lower withholding during the year through Step 4(b) of a new Form W-4. Our overtime pay calculator works out the premium for any week, and employers can read our guide to the new rules.
Sources
General information, not tax advice for your situation.
Is overtime tax free in 2026?
Partly. The premium portion of required overtime can be deducted from federal income tax, up to $12,500 or $25,000 joint. Social Security, Medicare and most state taxes still apply.
Does double time qualify?
Only the part that federal law requires. Double time paid because of a state or contract rule usually doesn't add to the qualifying amount.
Do I need to itemize to claim it?
No. It's available whether you take the standard deduction or itemize.
Does it apply to salaried employees?
Only to non-exempt employees who are owed overtime under federal law.
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