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No Tax on Overtime Calculator: Overtime Deduction

Estimate your federal qualified overtime deduction: the half-time premium, up to $12,500 ($25,000 joint), cut above $150,000 MAGI ($300,000 joint).

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Good to know: Scope: the federal “no tax on overtime” deduction (qualified overtime compensation deduction) on Schedule 1-A (Form 1040), Part III, for tax years 2025 through 2028. Only the overtime premium that the Fair Labor Standards Act (FLSA) requires counts — the extra “half” in time-and-a-half, not your regular pay for those hours. Following IRS Notice 2025-69, it turns what your pay stub shows into that premium: total time-and-a-half pay ÷ 3, a double-time premium ÷ 2, total double-time pay ÷ 4, or regular rate × ½ × hours over 40 in a workweek. Then it follows the form: up to $12,500 per return ($25,000 if married filing jointly); if your modified adjusted gross income (MAGI) is over $150,000 ($300,000 joint), the excess is divided by $1,000, rounded down, and $100 is taken off for each step. Married filing separately, returns without a valid Social Security number, and overtime that federal law does not require (exempt workers, state-law or contract overtime above the FLSA premium) get $0. Not included: deciding whether you are FLSA nonexempt, special rules for police, firefighters, hospitals and comp time, bonuses that change your regular rate, several employers with different methods, how to figure MAGI beyond your AGI, Social Security and Medicare tax, state income tax, and the tips, senior and car loan interest deductions on the same schedule. The tax saving is a rough estimate from the bracket you type. Everything stays in this browser tab; nothing is sent or saved. Independent ToolsKo estimate, not tax advice. Sources reviewed November 13, 2026.

How to use it (step by step)

  1. 1Pick your filing status and answer two questions: do you have a valid Social Security number, and does federal law (the FLSA) require your employer to pay you overtime?
  2. 2Pick how your overtime shows on your last pay stub of the year or your employer’s statement, and type that amount (or your hourly rate and overtime hours).
  3. 3Enter your MAGI (for most people, the adjusted gross income on Form 1040) and your tax bracket, then read your deduction and the rough tax saving.

Words to know

Overtime premium
The extra pay on top of your regular rate for hours over 40 in a workweek. At time-and-a-half on $20 an hour, you get $30; the premium is the extra $10. Only this part is deductible.
FLSA nonexempt
Covered by the federal overtime rule in the Fair Labor Standards Act, so your employer must pay time-and-a-half after 40 hours. Many hourly workers are nonexempt; many salaried managers are exempt.
Modified adjusted gross income (MAGI)
Your adjusted gross income from Form 1040, plus a few kinds of foreign or U.S. territory income that were left out. Most people’s MAGI is just their AGI.
Phase-out
The deduction shrinks as income rises: $100 less for every full $1,000 your MAGI is over $150,000 ($300,000 if married filing jointly).

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Sources & methods

References checked November 11, 2026. Read each tool’s scope and assumptions before relying on its result.

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