No Tax on Overtime Calculator
Enter your rate and weekly overtime to see how much of it is deductible and what you save in federal tax.
Example savings (single filer)
| Worker | Deductible premium / year | Federal tax saved |
|---|---|---|
| $20/hr, 5 OT hrs/week | $2,600 | $312 |
| $25/hr, 10 OT hrs/week | $6,500 | $1,280 |
| $35/hr, 8 OT hrs/week | $7,280 | $1,602 |
| $45/hr, 15 OT hrs/week | $12,500 | $3,000 |
The rules in brief
- Years: 2025 to 2028 tax years.
- What counts: only the premium half of FLSA overtime. On $30/hour overtime at time and a half, $15 per hour is deductible.
- Limit: $12,500 a year ($25,000 married filing jointly).
- Phase-out: the limit falls by $100 for each $1,000 of modified AGI above $150,000 ($300,000 joint).
- Available whether or not you itemize. Reduces federal income tax only.
Just need your overtime pay? Use the time and a half calculator.
Frequently asked questions
Is overtime tax-free in 2026?
Partly. For tax years 2025–2028, you can deduct the premium part of overtime (the extra "half" in time and a half) from your federal taxable income, up to $12,500 a year ($25,000 for joint filers). The rest of your overtime pay is taxed normally, and Social Security, Medicare and state taxes still apply.
Who qualifies for the no tax on overtime deduction?
Employees paid overtime required by the Fair Labor Standards Act (hours over 40 a week) who have a valid Social Security number. Married couples must file jointly. The limit falls by $100 for every $1,000 of income above $150,000 ($300,000 joint).
Will my paycheck go up?
Not automatically. The deduction is claimed on your tax return, so you get the benefit as a bigger refund or smaller bill, unless you adjust your W-4 to withhold less during the year.
Does state overtime or double time count?
Only overtime required by federal law qualifies. Extra pay required only by state law (such as California daily overtime), a union contract or company policy does not.