No Tax on Overtime Calculator
Work out your no tax on overtime deduction for 2025 to 2028: the qualified FLSA premium, the $12,500 or $25,000 cap, the MAGI phase-out and the tax you save.
Reviewed by Dany, RightSums team · Updated
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salary-tax · Daily life · US
Enter your overtime as hours over 40 a week and your regular rate, as total overtime pay from your pay stubs, or as the qualified amount on your Form W-2, then add your modified AGI and filing status. The calculator keeps only the part that qualifies, the half in time and a half required by the Fair Labor Standards Act (FLSA), applies the $12,500 cap ($25,000 married filing jointly) and takes off $100 for each full $1,000 of MAGI over $150,000 ($300,000 joint), as on Schedule 1-A. It then runs 2026 federal income tax with and without the deduction to show what you save. It does not reduce Social Security or Medicare tax, and state tax is not included.
Accepted inputs
- Overtime as hours over 40 a week, regular hourly rate and weeks
- Or total overtime pay for the year and the overtime multiplier
- Or qualified overtime from Form W-2 box 12 code TT
- Modified adjusted gross income (MAGI)
- Filing status: single, married filing jointly, head of household or married filing separately
Outputs
- Qualified overtime (the FLSA premium)
- Deduction after the $12,500 or $25,000 cap and the MAGI phase-out
- MAGI at which the deduction reaches $0
- Federal income tax with and without the deduction
- Estimated federal tax saved and your marginal rate
- Overtime pay that does not qualify
How to use the No Tax on Overtime Calculator
- Enter your overtime as hours over 40 a week with your regular rate, as total overtime pay with the multiplier, or as the qualified amount on your W-2.
- The calculator keeps only the FLSA premium, which is half your regular rate for each hour over 40 in a workweek.
- It caps that at $12,500 ($25,000 joint) and takes off $100 for each full $1,000 of MAGI over $150,000 ($300,000 joint), following Schedule 1-A.
- It then works out 2026 federal income tax with and without the deduction to show the tax you save and your marginal rate.
Frequently asked questions
How do you calculate no tax on overtime?
Only the premium counts: half your regular rate for each hour over 40 in a week. At $20 an hour with 10 hours over 40 for 52 weeks, the qualified amount is $5,200. A single filer with $60,000 of MAGI deducts all of it and saves $624 of federal income tax at the 12% rate.
What is the maximum no tax on overtime deduction?
The deduction is capped at $12,500 a year, or $25,000 on a joint return, for tax years 2025 to 2028. A single filer with $20,000 of qualified overtime and $120,000 of MAGI deducts $12,500, saving $2,750 at 22%. A couple filing jointly with $30,000 qualified and $200,000 MAGI deducts $25,000 and saves $5,500.
Does the overtime deduction phase out at higher incomes?
Yes. Schedule 1-A takes $100 off for each full $1,000 of MAGI over $150,000, or $300,000 on a joint return. A single filer with $175,500 of MAGI loses $2,500, so a $12,500 deduction becomes $10,000, saving $2,400 at 24%. A $12,500 deduction reaches $0 at $275,000 of MAGI.
Does double time count for the no tax on overtime deduction?
Only the FLSA half-rate premium counts. The IRS example is 10 hours over 40 at $20 an hour paid at double time: $400 of overtime pay, of which $100 qualifies. From total overtime pay, that is one-third at time and a half and one-quarter at double time. State daily overtime inside a 40-hour week does not qualify.
How do I claim the deduction on my tax return?
You claim it on Schedule 1-A of Form 1040, whether or not you itemise, with a valid Social Security number. Married couples must file jointly. For 2026, employers report qualified overtime on Form W-2 in box 12 with code TT. For 2025, use box 14 or your employer's statement, or a reasonable method such as one-third of time-and-a-half pay.
Sources
The rates and rules in this tool come from:
- IRS: Schedule 1-A, Additional Deductions (PDF)
- IRS: Fs 2026 13 (PDF)
- IRS: Notice 2025-69: qualified tips and overtime (PDF)
- IRS: What to know about the No Tax on Overtime deduction
- IRS: Working Families Tax Cuts: Tax deductions for working Americans and seniors
- IRS: Rev. Proc. 2025-32: 2026 inflation adjustments (PDF)
- US government: Overtime
- California Department of Industrial Relations: Overtime
- California Department of Industrial Relations: California Code of Regulations, Title 8, Section 11040. Order Regulating Wages, Hours…
- California Department of Industrial Relations: California Code of Regulations, Title 8, Section 11170. Miscellaneous Employees.
- Government of Ontario: Overtime pay
- GOV.UK: Overtime: your rights: Overview
- GOV.UK: National Minimum Wage and National Living Wage rates
- GOV.UK: Tax codes: What your tax code means
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