Pay & planning
No Tax on Overtime Calculator
Calculate your No Tax on Overtime deduction under the OBBBA: qualified premium, caps, phase-outs, and federal tax saved. For U.S. hourly workers.
Know the numbers
How to use this calculator
Enter your base hourly rate, overtime hours per week, weeks worked per year, filing status, modified adjusted gross income, and estimated tax bracket. Calculate to see your qualified overtime premium and deduction.
A worked example
$25/hr, 10 OT hours/week, 50 weeks, single, $80,000 MAGI, 22% bracket: qualified premium = $6,250, deduction = $6,250, tax saved = $1,375.
The calculation
Qualified premium = hourly rate × 0.5 × OT hours × weeks (only the extra 0.5× portion of time-and-a-half qualifies). Deduction = min(qualified, $12,500 single / $25,000 joint), reduced pro-rata above $150,000 / $300,000 MAGI.
Before you use the result
Only FLSA-required overtime (over 40 hours/week) qualifies. State-law, union, or employer-policy overtime does not. This is an estimate — withholding still applies to your paycheck; the deduction is claimed when filing 2025–2028. Consult a tax professional.
Common scenarios
Use this calculator whenever you need to verify your hours, check a paycheck, or prepare a timecard submission. The result is the same arithmetic the payroll department uses, displayed in a form you can inspect.
Calculation methodology: View formulas, limits, and corrections
Common questions about No Tax on Overtime Calculator
How does the no tax on overtime work?
Overtime is still taxed normally in your paycheck. When you file your return (2025–2028), you deduct the overtime premium portion — the extra 0.5× of time-and-a-half — from your federal taxable income. Up to $12,500 single / $25,000 joint.
How much can I deduct for overtime?
Up to $12,500 per year if single, or $25,000 if married filing jointly. The deduction phases out above $150,000 MAGI ($300,000 joint) and is fully gone at $250,000 / $400,000.
Is the full overtime pay deductible?
No. Only the premium portion qualifies. At time-and-a-half, the extra 0.5× is deductible — for example, $5 of a $15 overtime hour at a $10 base rate. The regular-rate portion still counts as wages.
Does overtime still get taxed from my paycheck?
Yes. Your employer withholds federal income tax, Social Security, and Medicare from overtime as before. The benefit comes as a deduction when you file your tax return for 2025 through 2028.
What overtime qualifies under the FLSA?
Only overtime required by federal law: generally hours worked over 40 in a workweek for non-exempt employees. Overtime paid only due to state law, union contracts, or employer policy does not qualify.