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No Tax on Overtime Calculator

Work out your 2026 overtime deduction (the FLSA "half" of time-and-a-half), the phase-out, and how much federal income tax it saves.

Updated November 4, 2026. Free, no sign-up; everything runs in your browser and nothing you type is stored.

No tax on overtime calculator (2026)

Filing statusRegular hourly rate ($)FLSA overtime hours a week (over 40)Weeks with overtime this yearOvertime multiplierOther income: regular pay and the rest ($ a year)

Your overtime deduction

–

–Federal income tax saved

–Qualified premium (the "half")

–Social Security and Medicare on overtime

–Phase-out

How the no tax on overtime deduction works

For 2025 through 2028, the One Big Beautiful Bill Act lets workers deduct qualified overtime compensation: only the premium part of overtime the Fair Labor Standards Act requires, the "half" in time-and-a-half (IRS). Your full overtime pay still shows on your W-2 and in your wages; the deduction comes off afterwards on Schedule 1-A, and you can take it whether you itemize or take the standard deduction.

Cap: $12,500 a year, or $25,000 on a joint return.
Phase-out: the deduction shrinks by $100 for each $1,000 of modified AGI over $150,000 ($300,000 joint).
Married couples must file jointly, and you need a valid Social Security number on the return.
It's an income tax deduction only: Social Security and Medicare tax (7.65%) still apply to all overtime pay.

Worked example

A single worker earns $30 an hour, works 6 hours of overtime a week for 50 weeks and has $62,400 of other pay. Overtime pay is $13,500 at time-and-a-half, but only the half-time premium, $4,500, qualifies. MAGI is $75,900, well under $150,000, so there's no phase-out. With the 2026 standard deduction of $16,100, taxable income drops from $59,800 to $55,300, which saves $990 of federal income tax (22% bracket).

What doesn't count

The regular-rate part of overtime pay (the "time" in time-and-a-half).
Overtime that only state law or a union contract requires, such as daily overtime or double time beyond the FLSA premium.
Pay of workers exempt from FLSA overtime (many salaried managers and professionals).

Employers report qualified overtime to you; for 2025 the IRS gave transition relief, so check your W-2 or pay records. To work out the overtime pay itself use the overtime calculator; tipped workers can also claim the no tax on tips deduction.

Common questions

Is overtime tax free in 2026?

Partly: you can deduct the FLSA overtime premium up to $12,500 ($25,000 joint), but Social Security and Medicare tax still apply.

What part of overtime is deductible?

Only the premium the FLSA requires, the half in time-and-a-half, not the regular rate.

When does the overtime deduction phase out?

Above $150,000 of modified AGI ($300,000 joint), reduced by $100 per $1,000 over.

Can married filing separately claim no tax on overtime?

No, married couples must file jointly.

Sources

More paycheck and tax calculators: Maine Excise Tax Calculator · Military Pay Calculator

General information, not financial, tax or legal advice. Check important numbers with the official source before acting on them.