Important:
This calculator provides an estimate of the potential federal income tax deduction for qualified overtime premium pay. It does not mean that all overtime pay is tax-free. Your actual tax result depends on your income, filing status, eligible overtime, and other tax information.
Calculator
No Tax on Overtime Calculator
Estimate the federal income-tax benefit of the qualified overtime deduction. Overtime wages are still taxable compensation.
Overtime Eligibility Checker
Based on U.S. federal overtime rules (FLSA)
This page explains how the calculator works, what inputs it uses, and how to read the results correctly.
Important Disclaimer This calculator provides an estimate of the potential federal income-tax deduction for qualified overtime compensation for the selected tax year. For 2026, the calculator uses the federal rules and tax data documented in its methodology. It does not mean that all overtime pay is tax-free. Actual tax results depend on your filing status, qualified overtime compensation, modified adjusted gross income, deductions, credits, and other information on your tax return. This calculator is for educational and planning purposes only. It is not tax advice and should not be used as a substitute for your actual tax documents or professional tax advice.
State Tax Note This calculator estimates the federal income-tax effect of the qualified overtime deduction. State income-tax treatment is not included in the result. State tax rules can differ, so check your state’s current rules separately. ↗The complete calculation formula, pseudocode, tax bracket lookup tables, and worked examples for this calculator are publicly documented on GitHub. Tax professionals, developers, and users can audit every step of the math independently.
Formula version: v1.1 · Last updated: July 2025 · Formula v1.1 · Updated April 2026 · Openly auditable on GitHub
This calculator focuses only on the premium portion of overtime – the extra 0.5x pay above your regular hourly rate, not the full 1.5x amount you receive.
The federal deduction is capped at $12,500 for single filers and $25,000 for joint filers. If your income is higher, the benefit gradually reduces and may phase out completely.
These estimates are based on 2025 federal tax brackets using the standard deduction. Keep in mind, state taxes and FICA (Social Security and Medicare) are not included in this calculation.
Source: One Big Beautiful Bill Act (OBBBA), signed July 4, 2025. Formula v1.1 · Updated April 2026 · Openly auditable on GitHub.
The calculator uses your filing status, regular hourly pay, overtime hours, number of working weeks, estimated MAGI, and other information to estimate your potential qualified overtime deduction and federal tax savings.
The term “No Tax on Overtime” is commonly used to describe this provision, but overtime pay is not completely tax-free. The federal provision generally allows eligible taxpayers to deduct the portion of qualified overtime compensation that exceeds their regular rate of pay, subject to eligibility requirements, income limits, and annual deduction limits.
What Is the No Tax on Overtime Deduction?
The federal “No Tax on Overtime” provision allows eligible individuals to claim a deduction for certain qualified overtime compensation.
For typical time-and-a-half overtime, the qualified portion is generally the amount paid above the employee’s regular rate. For example, if your regular rate is $20 per hour and you receive $30 per hour for qualifying time-and-a-half overtime, the additional $10 per hour may represent the portion that qualifies for the deduction.
This does not mean that the entire $30 overtime wage is exempt from federal income tax.
The IRS explains that qualified overtime compensation must generally be overtime required under the Fair Labor Standards Act (FLSA) and must be compensation above the employee’s regular rate of pay.
How Much Overtime Can You Deduct?
For the 2026 tax year, the maximum qualified overtime deduction is:
| Filing Status | Maximum Annual Deduction |
|---|---|
| Single | Up to $12,500 |
| Head of Household | Up to $12,500 |
| Married Filing Jointly | Up to $25,000 |
The deduction is subject to income-based limitations.
For taxpayers whose modified adjusted gross income is above the applicable threshold, the available deduction can be reduced.
| Filing Situation | MAGI Phaseout Threshold |
|---|---|
| Single / Individual | $150,000 |
| Married Filing Jointly | $300,000 |
The IRS confirms that the $25,000 maximum applies to a joint return, while the individual maximum is $12,500.
Important: Overtime Is Not Completely Tax-Free
The name “No Tax on Overtime” can be confusing.
You still generally receive overtime wages as part of your income. The new federal provision creates a deduction for qualified overtime compensation, rather than making all overtime wages exempt from tax.
This distinction is important.
For example, if you earn $10,000 in total overtime wages, you should not automatically assume that the entire $10,000 is deductible.
For qualifying time-and-a-half overtime, the portion above the regular rate is generally the amount that may qualify. Your final deductible amount can also be affected by the annual limit and the MAGI-based reduction.
Qualified overtime compensation can also remain subject to applicable employment taxes and federal withholding. The IRS specifically states that the deduction does not make qualified overtime compensation excluded from gross income or generally exempt from employment taxes.
How the No Tax on Overtime Calculator Works
Our calculator uses the information you provide to estimate your potential federal benefit.
Step 1: Enter Your Filing Status
Select the filing status that applies to your situation.
The calculator currently supports:
- Single
- Married Filing Jointly
- Head of Household
Your filing status matters because the federal deduction limit and tax calculation can differ depending on how you file.
Step 2: Enter Your Regular Hourly Rate
Enter your normal hourly pay before the overtime premium.
For example:
- Regular rate: $20 per hour
- Overtime rate at time-and-a-half: $30 per hour
The qualified portion in a typical time-and-a-half example is the amount above the regular $20 rate.
Step 3: Enter Your Overtime Hours
Enter the number of overtime hours you normally work.
For example, if you work 10 qualifying overtime hours each week, enter 10.
Step 4: Enter the Number of Weeks
Enter the approximate number of weeks during the year that you expect to receive qualifying overtime.
For example:
- 10 overtime hours per week
- 50 weeks
- Regular rate of $20 per hour
The calculator can use these figures to estimate your annual overtime compensation and the potentially qualified portion.
Step 5: Enter Your Estimated MAGI
Enter your estimated modified adjusted gross income according to the calculator’s instructions.
MAGI is important because the qualified overtime deduction can be reduced when income exceeds the applicable threshold.
The calculator uses your MAGI information to provide an estimate. It should not be treated as a substitute for calculating MAGI on your actual federal tax return.
What Is Qualified Overtime Compensation?
Not every payment described by an employer as “overtime” necessarily qualifies.
Under the federal rule, qualified overtime compensation generally refers to overtime compensation required under Section 7 of the Fair Labor Standards Act and paid above the employee’s regular rate.
The IRS describes the qualifying amount as compensation that exceeds the regular rate, such as the additional “half” portion of typical time-and-a-half overtime.
This means the calculation can be different from simply taking your entire overtime paycheck.
Example
Suppose your regular hourly rate is:
$20 per hour
You receive time-and-a-half overtime:
$30 per hour
The overtime premium is:
$30 – $20 = $10 per overtime hour
If you work 10 qualifying overtime hours, the premium portion would be:
10 × $10 = $100
This is a simplified example. Your actual qualified overtime amount can depend on your FLSA status, regular-rate calculation, payroll reporting, and other circumstances.
Example: How the Calculator Estimates Your Benefit
Suppose a worker has the following information:
| Input | Example |
|---|---|
| Filing Status | Single |
| Regular Hourly Rate | $20 |
| Overtime Hours per Week | 10 |
| Working Weeks | 50 |
| Typical Overtime Rate | Time-and-a-Half |
| Estimated MAGI | $80,000 |
The worker receives:
$20 × 1.5 = $30 per overtime hour
The premium above the regular rate is:
$30 – $20 = $10
Annual overtime hours:
10 × 50 = 500 hours
Estimated qualified premium:
500 × $10 = $5,000
In this simplified example, the estimated qualified overtime amount would be $5,000 before considering the applicable deduction limits and MAGI-related reduction.
Your actual tax savings can be different because the value of a deduction depends on your taxable income and applicable federal tax rate.
How Much Federal Tax Could You Save?
A deduction does not necessarily reduce your tax bill by the same amount as the deduction.
For example, a $5,000 deduction does not automatically mean that you will receive $5,000 back.
Instead, the deduction can reduce the amount of income subject to federal income tax.
The actual federal tax savings depend on factors such as:
- Filing status
- Taxable income
- Marginal federal tax rate
- Qualified overtime amount
- MAGI
- Applicable deduction limits
- Other deductions and tax provisions
Our calculator provides an estimate based on the information you enter.
2026 Federal Tax Brackets
The calculator uses the applicable 2026 federal income tax brackets for its federal tax estimate.
For 2026, the IRS announced the following standard deduction amounts:
| Filing Status | 2026 Standard Deduction |
|---|---|
| Single | $16,100 |
| Married Filing Jointly | $32,200 |
| Head of Household | $24,150 |
The 2026 federal income tax system uses marginal rates of 10%, 12%, 22%, 24%, 32%, 35%, and 37%.
The exact tax calculation depends on your taxable income and filing status.
2026 Federal Income Tax Rates
Single
| Taxable Income | Federal Rate |
|---|---|
| $0 – $12,400 | 10% |
| $12,400 – $50,400 | 12% |
| $50,400 – $105,700 | 22% |
| $105,700 – $201,775 | 24% |
| $201,775 – $256,225 | 32% |
| $256,225 – $640,600 | 35% |
| Over $640,600 | 37% |
Married Filing Jointly
| Taxable Income | Federal Rate |
|---|---|
| $0 – $24,800 | 10% |
| $24,800 – $100,800 | 12% |
| $100,800 – $211,400 | 22% |
| $211,400 – $403,550 | 24% |
| $403,550 – $512,450 | 32% |
| $512,450 – $768,700 | 35% |
| Over $768,700 | 37% |
Head of Household
| Taxable Income | Federal Rate |
|---|---|
| $0 – $17,700 | 10% |
| $17,700 – $67,450 | 12% |
| $67,450 – $105,700 | 22% |
| $105,700 – $201,750 | 24% |
| $201,750 – $256,200 | 32% |
| $256,200 – $640,600 | 35% |
| Over $640,600 | 37% |
These are 2026 federal tax brackets published by the IRS.
Who May Qualify for the Overtime Deduction?
You may be eligible for the qualified overtime deduction if you meet the applicable federal requirements.
Important requirements include:
- You received qualified overtime compensation.
- The overtime generally must be required under the FLSA.
- The qualifying amount must be compensation above the regular rate.
- You must meet the applicable taxpayer identification requirements.
- Married taxpayers generally must file a joint return to claim the deduction.
- The deduction is available whether you itemize or take the standard deduction.
- The deduction is subject to annual limits and MAGI-based limitations.
The IRS states that the provision applies for tax years beginning after 2024 and ending before 2029, covering 2025 through 2028.
Does the Deduction Apply to All Overtime Pay?
No.
This is one of the most important points to understand.
The federal deduction is not a blanket deduction for every dollar described as overtime.
Qualified overtime generally refers to the overtime compensation required under the FLSA that is paid above the employee’s regular rate.
For a typical time-and-a-half arrangement, the premium portion is generally the qualifying part.
Other overtime arrangements can require a different calculation.
If your employer pays overtime for reasons beyond what is required under the FLSA, that payment may not automatically qualify for the federal deduction.
What About Overtime on My W-2?
The IRS has established reporting requirements for qualified overtime compensation.
For 2026, qualified overtime compensation is reported using the applicable reporting rules, including Form W-2 Box 12, Code TT where applicable.
The amount reported is used when determining the deductible qualified overtime compensation on the federal tax return.
The IRS explains that taxpayers generally report the qualified overtime amount and then apply the applicable annual and MAGI limitations when determining the deductible amount.
Always compare the calculator estimate with your actual tax documents and the instructions for your federal tax return.
Can Married Taxpayers Claim the Overtime Deduction?
Yes, but there is an important filing requirement.
If you are married, the IRS states that you generally must file a Married Filing Jointly return to claim the qualified overtime deduction.
The maximum deduction for a joint return can be up to $25,000, subject to the applicable rules and income limitations.
Does the Overtime Deduction Apply if I Take the Standard Deduction?
Yes.
The qualified overtime deduction is available to eligible taxpayers regardless of whether they itemize deductions or claim the standard deduction.
This is different from deductions that are available only when itemizing.
The IRS specifically confirms that qualified overtime can be deducted by taxpayers who itemize and those who take the standard deduction.
Is Overtime Still Subject to Payroll Taxes?
Generally, yes.
The qualified overtime deduction does not mean that overtime wages disappear from your paycheck for employment-tax purposes.
The IRS explains that qualified overtime compensation generally remains subject to applicable employment taxes, including Social Security and Medicare taxes.
Federal income tax withholding can also still apply during the year.
The deduction is generally claimed when determining your federal income tax liability.
Why Does My Overtime Paycheck Still Have Tax Withheld?
You may still see federal income tax withholding on an overtime paycheck even if you expect to qualify for the overtime deduction.
Payroll withholding and your final federal income tax liability are not exactly the same thing.
Your employer may withhold federal income tax during the year, while the qualified overtime deduction is ultimately taken into account when determining your federal income tax liability.
This is one reason your overtime paycheck may not suddenly show zero federal tax withholding.
No Tax on Overtime Calculator vs. Actual Tax Return
Our calculator is designed to provide an estimate.
It does not prepare or file your tax return.
Your actual tax result can depend on information that is not included in a simple overtime calculator, including:
- Other income
- Adjustments to income
- Tax credits
- Other deductions
- Dependents
- Capital gains
- Investment income
- Self-employment income
- Other tax provisions
- Your actual qualified overtime amount
- Your final MAGI
For an official tax filing, use your tax documents and the current IRS forms and instructions. Consider consulting a qualified tax professional if your situation is complex.
Calculator Methodology
The calculator is designed to estimate the federal tax impact of qualified overtime compensation using the information entered by the user.
The general calculation process includes:
- Estimating annual overtime hours from weekly overtime and working weeks.
- Estimating overtime compensation using the regular hourly rate and applicable overtime assumptions.
- Identifying the estimated premium portion above the regular rate.
- Applying the applicable annual qualified overtime deduction limit.
- Considering the applicable MAGI-based limitation.
- Estimating the change in federal income tax using the applicable tax-year brackets.
- Presenting the estimated qualified overtime deduction and potential federal tax savings.
The calculator is intended for educational and planning purposes. It does not replace the IRS Schedule 1-A, Form 1040 instructions, employer payroll records, or professional tax advice.
Why Your Calculator Result May Differ From Your Tax Return
A calculator can provide a useful estimate, but your actual tax return may produce a different result.
Possible reasons include:
- Your actual regular rate may differ from your hourly base rate.
- Your overtime may not all be required under the FLSA.
- Your employer may calculate the regular rate using additional compensation.
- Your actual qualified overtime amount may be different from the estimate.
- Your final MAGI may differ from the number entered.
- You may have additional income or deductions.
- You may qualify for other tax credits or deductions.
- IRS forms and instructions may contain requirements that are not captured by a simplified calculator.
For this reason, do not use the calculator result as a guaranteed refund or guaranteed tax savings amount.
Frequently Asked Questions
Find clear answers to common questions about the No Tax on Overtime Calculator, qualified overtime deduction, eligibility, limits, and estimated federal tax savings.
It is an online calculator designed to estimate the potential federal tax benefit from the qualified overtime deduction. It uses information such as filing status, regular hourly rate, overtime hours, working weeks, and estimated MAGI.
No. The federal provision does not make all overtime wages tax-free. Eligible taxpayers may receive a deduction for qualified overtime compensation, generally the portion above the regular rate, subject to the applicable limits and requirements.
The maximum is generally $12,500 per individual return and $25,000 for a married couple filing jointly, subject to the applicable rules and MAGI limitation.
The deduction begins to phase out when modified adjusted gross income exceeds $150,000 for individual taxpayers or $300,000 for married taxpayers filing jointly.
Yes. The federal provision applies to qualified overtime compensation for tax years beginning after 2024 and ending before 2029, which includes 2026.
Yes. The provision applies beginning with the 2025 tax year. Special reporting transition rules applied to 2025.
Yes. Eligible taxpayers can claim the qualified overtime deduction whether they itemize deductions or use the standard deduction.
The IRS states that married taxpayers generally must file a joint return to claim the qualified overtime deduction.
For typical time-and-a-half overtime, the amount above the regular rate is generally the qualifying premium portion. For example, if the regular rate is $20 and overtime is paid at $30, the $10 premium is the portion that may qualify.
A deduction reduces taxable income. It does not normally reduce your tax bill dollar-for-dollar.
For example, a $5,000 deduction does not automatically produce $5,000 in tax savings.
This calculator focuses on the federal qualified overtime deduction. State income-tax rules can be different and may not follow the federal treatment.
The calculator is an estimation tool and is not a tax-return preparation service. Use your official tax documents, IRS forms, and instructions when preparing your return.
If you have a simple wage and overtime situation, the calculator can help you understand the general concept. If you have multiple income sources, unusual overtime arrangements, self-employment income, complex deductions, or other tax issues, consider speaking with a qualified tax professional.
Official Sources and Methodology
This calculator is based on publicly available federal tax information and is designed to make the qualified overtime deduction easier to understand.
Primary sources include:
- Internal Revenue Service guidance on qualified overtime compensation
- IRS Schedule 1-A instructions
- IRS 2026 federal income tax brackets
- IRS 2026 standard deduction amounts
- Fair Labor Standards Act overtime requirements
- Applicable federal legislation and Treasury guidance
Tax rules can change. We review the calculator and supporting information when relevant federal guidance changes.
Important Disclaimer
This website provides general educational information and an estimation tool. It is not a tax advisory, accounting, or legal service.
Calculator results are estimates and should not be considered a guarantee of your actual tax savings, refund, deduction, or tax liability.
The qualified overtime deduction has specific eligibility, reporting, income, and calculation requirements. Your actual result may differ from the estimate produced by this calculator.
Always review your actual tax documents and current IRS forms and instructions before filing a federal tax return.
If your tax situation is complicated or you are unsure whether your overtime qualifies, consult a qualified tax professional.
About the Calculator
overtime premium calculator is an independent, free-to-use tool built to help U.S. hourly and salaried workers estimate their potential federal tax savings under the One Big Beautiful Bill Act (OBBBA) for tax years 2025 through 2028.
The No Tax on Overtime Calculator was created to make a complicated federal tax provision easier for workers to understand. The goal is simple: Enter your overtime information, understand the potentially qualified amount, and get a clearer estimate of the possible federal tax benefit. The calculator is designed to explain the calculation rather than simply provide a final number. We also publish supporting guides covering overtime rules, W-2 reporting, federal tax calculations, and other topics that can help workers understand how qualified overtime compensation works.
Sources and methodology
The information and calculation methodology used on this website are based primarily on official U.S. government sources and publicly documented calculation methods.
- IRS: Qualified Overtime Compensation — Information about eligibility, qualified overtime, deduction limits, income phaseouts, and other federal rules.
- IRS: 2026 General Instructions for Forms W-2 and W-3 — Official 2026 reporting instructions, including Box 12, Code TT for qualified overtime compensation.
- U.S. Department of Labor: FLSA Overtime Pay — Federal overtime requirements under the Fair Labor Standards Act.
- Congress: H.R. 1 / Public Law 119-21 — Federal legislation commonly known as the One Big Beautiful Bill Act, which established the qualified overtime deduction.
- GitHub: No Tax on Overtime Calculator Methodology — Public documentation of the calculator’s formula, methodology, pseudocode, worked examples, limitations, and changelog.
Tax rules and administrative guidance can change. Always review the latest IRS guidance before using an estimate to prepare or file a tax return.