Qualified overtime is the extra half of time-and-a-half pay. Enter the amount your W-2 reports as qualified overtime, or leave it blank to estimate it from your hourly rate and overtime hours.
Select your filing status, enter your modified AGI, and add your overtime details to estimate your qualified overtime deduction for 2025 through 2028.
About the no-tax-on-overtime deduction estimator
The no-tax-on-overtime deduction estimator shows how much qualified overtime pay you may be able to deduct on your federal return. Pick your filing status, enter your modified adjusted gross income (MAGI), and add your overtime. The tool returns an estimated qualified overtime deduction, already capped at the legal maximum and reduced for the income phaseout.
The deduction comes from the One Big Beautiful Bill (IRC section 225) and applies to tax years 2025 through 2028. Qualified overtime is the premium portion of FLSA time-and-a-half pay: the extra half above your regular rate. The maximum deduction is $12,500 for single or head-of-household filers and $25,000 for married filing jointly. Married filing separately cannot claim it, because married filers must file a joint return to take the deduction. The maximum is reduced by $100 for every $1,000 of MAGI above $150,000 (non-joint) or $300,000 (joint). For 2026 and later, only qualified overtime that is separately reported on your Form W-2 is deductible. This is a planning estimate, not tax or financial advice. Confirm your numbers with a tax professional.
How to use
- Select your federal tax filing status: single or head of household, married filing jointly, or married filing separately.
- Enter your modified adjusted gross income (MAGI).
- Enter the amount your W-2 reports as qualified overtime, or leave it blank to estimate it.
- If you are estimating, enter your regular hourly rate and the overtime hours you worked.
- Select Estimate overtime deduction to see your qualified overtime deduction.
Worked examples
Single, $60,000 MAGI, $40/hr, 200 OT hours: $4,000 deduction
The half-premium of time-and-a-half is $20/hr x 200 hours = $4,000, below the $12,500 cap and the $150,000 phaseout, so the full premium is deductible.
Single, $90,000 MAGI, $30,000 reported qualified overtime: $12,500 deduction
Reported qualified overtime above the cap is limited to the $12,500 maximum for non-joint filers.
Married filing separately: $0 deduction
Married filing separately is not eligible; a joint return is required to claim the deduction.
Frequently asked questions
- What is the no-tax-on-overtime deduction?
- It is a federal deduction created by the One Big Beautiful Bill (IRC section 225) for tax years 2025 through 2028. It lets eligible workers deduct qualified overtime compensation, which is the premium portion of FLSA-required time-and-a-half pay: the extra half above your regular rate. It is a deduction, not an exemption, and your actual benefit depends on your full tax return.
- How much overtime can I deduct?
- The maximum deduction is $12,500 for single or head-of-household filers and $25,000 for married filing jointly. The deduction cannot exceed your qualified overtime, and it is reduced by the income phaseout. Married filing separately filers cannot claim it.
- How does the income phaseout work?
- The maximum deduction is reduced by $100 for every $1,000 (rounded up) that your modified adjusted gross income exceeds $150,000 for non-joint filers or $300,000 for married filing jointly. Once MAGI is high enough, the deduction phases out to $0. This tool applies that reduction to the cap before comparing it to your qualified overtime.
- Why can't married filing separately claim it?
- The law requires married individuals to file a joint return to take the no-tax-on-overtime deduction. If you are married and file separately, you cannot claim it. File jointly to be eligible, and choose married filing jointly in the tool.
- What counts as qualified overtime for 2026 and later?
- Beginning with the 2026 tax year, only qualified overtime that is separately reported on your Form W-2 (or applicable 1099) is deductible. Employers are updating their reporting to show the qualified overtime amount. If you do not know your reported figure, this tool can estimate the premium from your hourly rate and overtime hours, but the deductible amount on your return is the separately reported figure.
- Does this calculator give tax advice or store my numbers?
- No. It is a planning estimate based on the published federal rules, and it is not tax or financial advice. The calculation runs entirely in your browser. The tool does not collect your name, Social Security number, W-2, employer, or any income data, and it does not save the values you enter.
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