No tax on overtime calculator

From 2025 through 2028 you can deduct the extra pay you earn for overtime, the half in time and a half, from your federal taxable income.

Enter your overtime pay and your income to see how much you can deduct and roughly how much tax it saves.

How it's calculated

Only the premium counts. At time and a half, that is one third of your total overtime pay.
The deduction is capped at $12,500 a year, or $25,000 for married couples filing jointly.
If your MAGI is over $150,000 ($300,000 on a joint return), the cap drops by $100 for each full $1,000 over.
The tax saved is the difference between the tax on your taxable income with and without the deduction.

An example

A single worker paid $15,000 for overtime has a $5,000 premium. With $63,900 of taxable income in the 22% bracket, deducting it saves $1,100 of federal income tax.

Frequently asked questions

Is all my overtime pay tax free?

No. Only the premium above your regular rate can be deducted, and only income tax goes down. Social Security, Medicare and state taxes still apply.

Where do I find my qualified overtime?

For 2026, employers report it on Form W-2 in box 12 with code TT. Independent contractors may see it on Form 1099.

Do I have to itemize to get it?

No. You claim it on Schedule 1-A and it works with the standard deduction too.

Does overtime under a union contract count?

Only the part required by the Fair Labor Standards Act. Extra overtime that a contract or state law adds on top, such as daily overtime or double time, does not qualify.

Key terms

Qualified overtime compensation: The pay above your regular rate that federal law requires for hours over 40 in a workweek.
MAGI: Modified adjusted gross income. For most people it equals AGI.

Up-to-date official data

Data checked against the official source on October 14, 2026.

We check the official sources automatically, every day.

See all sources

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