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No Tax on Overtime Calculator
Free No Tax on Overtime calculator: find the qualified overtime premium, the $12,500/$25,000 cap, the $150k/$300k MAGI phase-out and federal tax saved.
No Tax on Overtime is a federal deduction for tax years 2025 to 2028. Eligible workers deduct only the half-time premium of FLSA-required overtime, up to $12,500 ($25,000 on a joint return). It shrinks by $100 for every full $1,000 of MAGI above $150,000 ($300,000 joint). Social Security, Medicare and most state income taxes still apply.
Updated
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Estimate your No Tax on Overtime deduction
Enter your overtime, filing status and modified adjusted gross income. The calculator finds the qualified (half-time) premium, applies the $12,500 or $25,000 cap and the income phase-out, and estimates the federal income tax it saves. Figures follow Schedule 1-A (Form 1040), Part III.
How do you know your overtime?
- Qualified overtime premium
- $4,500
- After the $12,500 cap
- $4,500
- Phase-out (MAGI over $150,000)
- $0.00
- Your deduction
- $4,500
- Federal tax saved at 22%
- $990.00
No phase-out below MAGI of $150,000.
Estimate only, not tax advice. The deduction lowers federal taxable income for tax years 2025 to 2028. Overtime is still subject to Social Security, Medicare and income tax withholding, and state income tax is unaffected unless your state conforms to it. Tax saved uses one marginal rate, so it is approximate if the deduction moves you into a lower bracket.
How the math works, with sources
Qualified overtime compensation is only the part of FLSA-required overtime that exceeds the regular rate: the “half” in time-and-a-half. Per workweek, the IRS formula is FLSA hours over 40 x one half x the FLSA regular rate. Overtime paid only because of state law, a union contract or company policy (daily overtime, double time, weekend premiums) does not add to it; with double time, still only the half-time premium counts.
The deduction is the smaller of that premium and $12,500 ($25,000 on a joint return, combined for both spouses). If MAGI is over $150,000 ($300,000 joint), divide the excess by $1,000, drop any fraction, and multiply by $100. Subtract that from the capped amount, not below zero (Schedule 1-A lines 15 to 21).
Worked example: $30/hr, 300 overtime hours, single, MAGI $72,000, 22% bracket. Premium = 300 x $15 = $4,500. Under the cap and under $150,000, so the deduction is $4,500 and federal tax falls by about $990. A single filer with the same overtime and MAGI of $180,000 loses 30 x $100 = $3,000, leaving a $1,500 deduction.
Sources: IRS Schedule 1-A (Form 1040), Part III, IRS FS-2026-13, qualified overtime Q&A (Aug 2026), IRS: What to know about the No Tax on Overtime deduction, IRS: OBBBA deductions for working Americans (FS-2025-03), DOL Fact Sheet #23, FLSA overtime.
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What you get
- A calculator that works from overtime hours, total overtime pay or the W-2 box 12 code TT amount
- The cap and MAGI phase-out applied exactly as on Schedule 1-A (Form 1040), Part III
- Estimated federal income tax saved at your bracket
- Worked examples for single and joint filers, the cap, the phase-out and double time
- Sources from IRS.gov and the Department of Labor, linked on the page
Template preview
A preview of the structure. Download the PDF or CSV for the complete, ready-to-use version.
Inputs
- Regular hourly rate (FLSA regular rate)— Includes nondiscretionary bonuses and shift differentials
- FLSA overtime hours for the year— Hours over 40 in each workweek
- Or: qualified overtime compensation— Form W-2 box 12, code TT (tax year 2026 onward)
- Filing status— Single, head of household, married filing jointly (MFS cannot claim)
Deduction worksheet (Schedule 1-A, Part III logic)
Example: single filer, $30/hr regular rate, 300 FLSA overtime hours, MAGI $180,000.
| Step | What to calculate | Formula | Example |
|---|---|---|---|
| 1 | Qualified overtime premium | OT hours x 0.5 x regular rate | 300 x $15 = $4,500 |
| 2 | Apply the cap | Smaller of step 1 or $12,500 ($25,000 joint) | $4,500 |
| 3 | MAGI over the threshold | MAGI - $150,000 ($300,000 joint), not below 0 | $30,000 |
| 4 | Phase-out steps | Step 3 / $1,000, drop any fraction | 30 |
Worked examples
| Scenario | Inputs | Calculation | Deduction |
|---|---|---|---|
| Typical hourly worker | $30/hr, 300 OT hrs, single, MAGI $72,000 | 300 x $15 = $4,500; under cap and threshold. At 22%, saves about $990 | $4,500 |
| Above the cap | Premium $15,000, single, MAGI $120,000 | Capped at $12,500. At 24%, saves about $3,000 | $12,500 |
| Two earners, joint return | Premiums $9,000 + $7,000, MAGI $210,000 | $16,000 combined, under the $25,000 joint cap and $300,000 threshold | $16,000 |
| In the phase-out | Premium $4,500, single, MAGI $180,000 | $4,500 - 30 x $100 | $1,500 |
What counts as qualified overtime compensation
Only overtime required by section 7 of the Fair Labor Standards Act (29 USC 207), paid to an FLSA overtime-eligible (non-exempt) employee, and only the part above the regular rate. For most employees the IRS formula per workweek is: FLSA hours over 40 x one half x the FLSA regular rate. Overtime an employer pays under state law, a union contract or its own policy (daily overtime after 8 hours, weekend or holiday premiums, double time) adds nothing beyond that FLSA half-time amount. Exempt employees, including those paid overtime voluntarily, have no qualified overtime compensation. An employee who owns at least 20% of the business and actively manages it is generally exempt.
What the deduction does not change
It is an income tax deduction, not an exclusion from wages. Overtime is still subject to federal income tax withholding, Social Security, Medicare and federal unemployment tax. You can claim it whether you itemize or take the standard deduction. State income tax is only affected if your state conforms to the federal deduction, so check your state's rules. The deduction applies to tax years 2025 through 2028.
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How to use this template
- 1
Find your qualified overtime
From 2026, use the amount in Form W-2 box 12, code TT. For 2025, work it out from pay stubs: FLSA overtime hours x half your regular rate, or one third of total time-and-a-half pay.
- 2
Enter filing status and MAGI
Pick your filing status and enter modified adjusted gross income: AGI plus any excluded foreign or Puerto Rico income. Married couples must file jointly to claim the deduction.
- 3
Read the deduction and tax saved
The calculator caps the premium at $12,500 ($25,000 joint), subtracts $100 for each full $1,000 of MAGI over $150,000 ($300,000 joint), and multiplies the result by your marginal rate.
- 4
Claim it or adjust withholding
Claim the deduction on Schedule 1-A with your Form 1040. To see the benefit in each paycheck instead of at filing time, give your employer a new Form W-4 that accounts for it in step 4(b).
Frequently asked questions
How does the No Tax on Overtime deduction work?
For tax years 2025 to 2028, workers who are owed overtime under the FLSA can deduct the premium portion of that overtime from federal taxable income, up to $12,500 ($25,000 on a joint return). It is claimed on Schedule 1-A with Form 1040, whether you itemize or take the standard deduction.
Is all of my overtime pay tax-free?
No. Only the half-time premium counts. At $30 an hour, time and a half is $45, and only the extra $15 an hour is deductible. 300 overtime hours give a $4,500 deduction, worth about $990 to someone in the 22% bracket. The straight-time $30 stays taxable.
What is the income limit for No Tax on Overtime?
The deduction is reduced by $100 for each full $1,000 of modified AGI above $150,000, or $300,000 on a joint return. A single filer with the full $12,500 deduction loses it entirely at $275,000 of MAGI; a joint return with $25,000 loses it at $550,000.
Does No Tax on Overtime apply to Social Security, Medicare or state taxes?
No. It reduces federal income tax only. Overtime is still subject to Social Security and Medicare and to income tax withholding. State income tax changes only if your state conforms to the federal deduction.
Does double time or California daily overtime qualify?
Only to the extent the FLSA requires it. If you are paid double time, only the half-time premium the FLSA requires counts: $20 an hour for 10 overtime hours paid at $40 gives $100 of qualified overtime, not $200. Daily overtime required only by state law does not qualify.
Where do I find my qualified overtime amount?
From tax year 2026, employers report it on Form W-2 in box 12 with code TT. For 2025 it was not required, so check box 14 or a separate employer statement, or work it out from pay stubs using the methods in IRS Notice 2025-69 and the Schedule 1-A instructions. For most hourly workers that comes to FLSA overtime hours x half the regular rate.