No Tax on Overtime Deduction Calculator
Estimate the temporary 2025-2028 qualified overtime deduction with FLSA premium-only pay-stub math, the $12,500/$25,000 annual cap, MAGI phaseout, reporting, SSN, and married filing checks.
Last Updated: May 25, 2026
The no tax on overtime deduction is currently available for tax years 2025 through 2028.
Married taxpayers must file jointly to claim this deduction.
Choose the method that best matches your pay stub, W-2, 1099, or employer statement.
Use Schedule 1-A MAGI, generally AGI plus certain foreign, Puerto Rico, or American Samoa exclusions.
Enter the overtime amount from your pay statement, W-2, 1099, or your direct qualified premium estimate.
Used only when estimating from hours and rate. Count hours above the FLSA overtime threshold.
Used only when estimating from hours and rate. The qualified premium is 50% of the regular rate.
Add separately reported qualified FLSA overtime premium from another employer or payor.
Subtract state-only overtime, contract-only premiums, holiday pay, weekend pay, shift differentials, tips, or other excluded amounts.
The deduction reduces federal income tax, not Social Security or Medicare tax.
Use 0% unless your state conforms to the federal Schedule 1-A overtime deduction.
Use 7.65% for employee FICA or another rate for your payroll-tax planning estimate.
Select yes when the overtime is tied to FLSA-covered, nonexempt overtime work.
Only the FLSA-required premium portion is qualified. Extra contract or state-only premiums should be excluded.
Qualified overtime must be reported on a Form W-2, Form 1099, or another statement furnished to the worker.
The worker claiming the deduction must have a Social Security number.
Select no if the modeled amount still includes state-only, contract-only, weekend, holiday, shift, tip, or other nonqualified premiums.
Deduction Status
Potentially deductible
Allowed Overtime Deduction
$5,000
Estimated Income Tax Savings
$1,100
MAGI Phaseout Reduction
$0
Qualified overtime premium
- Statement overtime amount
- $15,000
- Method-derived FLSA premium
- $5,000
- Additional qualified premium
- $0
- Less excluded overtime
- $0
- Before annual cap
- $5,000
- Annual cap result
- $5,000
MAGI phaseout
- Phaseout starts at
- $150,000
- MAGI over threshold
- $0
- $100 reduction steps
- 0
- Full cap phased out at
- $275,000
- Current deduction reaches zero at
- $200,000
Annual cap
Current filing status cap: $12,500. Unused cap after the modeled overtime premium: $7,500.
Payroll tax remains
Estimated FICA or payroll tax still tied to modeled overtime: $1,148 at 7.65%.
Pay-stub method
The calculator divides total time-and-a-half overtime pay by 3 to isolate the half-time FLSA premium.
Eligibility and recordkeeping note
The inputs pass the calculator's eligibility checks. Keep Form W-2 or Form 1099 statements, employer overtime breakdowns, regular-rate support, time records, proof the overtime was FLSA-required, SSN support, and any Schedule 1-A workpapers.
The modeled qualified overtime premium is below the annual cap, so eligibility, reporting, and pay-stub support are the main constraints. This estimate is not a final Schedule 1-A calculation and does not decide state conformity, employer reporting, regular-rate disputes, payroll tax treatment, or whether non-FLSA premium pay qualifies.
Important Disclaimer
This calculator provides estimates for informational purposes only and does not constitute tax, legal, or financial advice. Tax laws are complex and change frequently. Consult a qualified tax professional for advice specific to your situation. CalculatorWallah is not responsible for any decisions made based on calculator results.
Reviewed For Methodology, Labels, And Sources
Every CalculatorWallah calculator is published with visible update labeling, linked source references, and review of formula clarity on trust-sensitive topics. Use results as planning support, then verify institution-, policy-, or jurisdiction-specific rules where they apply.
Reviewed by Iliyas Khan, Chief Operating Officer. Page updated May 25, 2026. Tax, sales tax, insurance, and health calculators are reviewed when rules, rates, eligibility assumptions, healthcare standards, or source references change. Topic ownership: Tax calculators, Sales tax calculators, Insurance calculators, Health calculators.
Tax credentialed review: Named internal reviewer: Iliyas Khan, Chief Operating Officer. External credentialed professional review is still required before this page is treated as professional advice.
Internal tax and sales-tax methodology reviewer. Review scope: calculator assumptions, labels, source context, workflow clarity, and compliance-sensitive disclaimers.
Relevant review context: CalculatorWallah tax and sales-tax calculator workflow owner; Source-first review of IRS, state revenue, rate, and filing-sensitive references; Compliance-sensitive labels, assumptions, and user-facing disclaimer review.
Required professional credentials: CPA, Enrolled Agent, licensed tax professional. Scope: tax formulas, jurisdiction assumptions, withholding language, filing-sensitive examples, and compliance caveats.
This page is educational planning support. A named CPA, EA, or licensed tax professional should review the page before it is positioned as tax advice or used for filing decisions.
Source expectation: Review should cite current IRS, state revenue department, payroll-tax, or official tax authority sources where applicable.
How To Use The No Tax on Overtime Deduction Calculator
Step 1: Select tax year and filing status
Choose a tax year from 2025 through 2028 and select filing status so the correct annual cap, MAGI phaseout threshold, and married filing rule are applied.
Step 2: Choose the overtime pay-stub method
Select whether your statement shows a separate FLSA premium, total time-and-a-half overtime, total double-time overtime, a double-time premium amount, or hours and regular rate.
Step 3: Enter MAGI and overtime amounts
Add Schedule 1-A MAGI, the overtime amount from your statement, any additional qualified overtime from another employer, and any nonqualified premiums that should be removed.
Step 4: Confirm FLSA, reporting, and SSN checks
Confirm the overtime is FLSA-required, reported on an allowed statement, tied to a worker with an SSN, and free of state-only or contract-only premium amounts.
Step 5: Review the allowed deduction and tax savings
Compare the qualified overtime premium, annual cap, MAGI phaseout, estimated income tax savings, and payroll-tax reminder before adjusting withholding or estimated payments.
How This Calculator Works
The calculator first isolates the qualified FLSA overtime premium. If a pay statement shows total time-and-a-half overtime pay, the calculator divides that amount by 3. If it shows total double-time overtime pay, the calculator divides that amount by 4. If you estimate from hours and rate, it multiplies FLSA overtime hours by the regular hourly rate and 50%.
After removing nonqualified premiums, the calculator applies the annual deduction cap: $12,500 for non-joint returns or $25,000 for married filing jointly. It then applies the MAGI phaseout above $150,000, or above $300,000 on a joint return.
The allowed deduction is multiplied by the federal marginal tax rate and any state conforming rate you enter. Payroll tax is shown separately because the overtime deduction reduces income tax, not Social Security, Medicare, or other payroll tax.
No Tax on Overtime Deduction Planning: 2026 Rules, Phaseouts, And Pay-Stub Math
No Tax on Overtime is a premium-only deduction
The most important planning detail is that qualified overtime compensation is not the entire overtime paycheck. IRS guidance ties the deduction to the overtime premium required under section 7 of the Fair Labor Standards Act. For many hourly employees, that means the extra half-time premium above regular pay is the qualified amount.
Example: if an employee earns $30 per hour and works 10 qualifying FLSA overtime hours at time-and-a-half, total overtime pay may be $450. The qualified overtime premium is $150, not $450, because the deductible part is the extra half-time premium.
Key deduction rules
| Planning item | Current rule modeled | Why it matters |
|---|---|---|
| Tax years | 2025 through 2028 | The deduction is temporary unless extended |
| Annual cap | $12,500 non-joint, $25,000 joint | The cap applies before the MAGI phaseout |
| Income phaseout | $150,000 MAGI, or $300,000 if joint | Each whole $1,000 over the threshold reduces the deduction by $100 |
| Reporting | W-2, 1099, or furnished statement | Unsupported overtime can jeopardize the Schedule 1-A deduction |
Common pay-stub math
| Your statement shows | Calculator method | Reason |
|---|---|---|
| Separate qualified FLSA overtime premium | Use the stated premium | The amount already isolates the qualified premium |
| Total time-and-a-half overtime pay | Divide by 3 | The half-time premium is one third of total 1.5x overtime pay |
| Total double-time overtime pay | Divide by 4 | The FLSA half-time premium is one fourth of total 2x overtime pay |
| FLSA overtime hours and regular rate | Hours x regular rate x 50% | This estimates the required half-time premium |
Payroll tax still applies
The overtime deduction can reduce federal income tax, but it does not remove wages from Social Security, Medicare, or other payroll tax calculations. Keep this distinction in mind when comparing the calculator's income tax savings with actual paycheck withholding.
Connect the result to withholding and estimated taxes
After estimating the deduction here, use the W-4 Withholding Adjustment Calculator to test paycheck withholding changes, or the Taxable Income Calculator to see how the Schedule 1-A deduction may affect taxable income before brackets.
Records to keep before filing
Keep Form W-2, Form 1099, employer statements, pay stubs, regular-rate support, time records, overtime policy documents, evidence the premium was FLSA-required, SSN support, and Schedule 1-A worksheets. If your state does not conform to the federal deduction, leave the state conforming rate at 0% and model state tax separately.
Keep the research moving with W-4 Withholding Adjustment Calculator, Taxable Income Calculator, Federal Income Tax Calculator, and FICA Tax Calculator.
Frequently Asked Questions
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- 1.IRS - What to Know About the No Tax on Overtime Deduction(Accessed May 2026)
- 2.IRS - Questions and Answers About the New Deduction for Qualified Overtime Compensation(Accessed May 2026)
- 3.IRS - Schedule 1-A Additional Deductions Overview(Accessed May 2026)
- 4.IRS - One Big Beautiful Bill Act Tax Deductions for Working Americans and Seniors(Accessed May 2026)
- 5.U.S. Department of Labor - Overtime Pay(Accessed May 2026)