No Tax on Overtime Calculator
Only the premium part of overtime pay is deductible: the extra half in time and a half, not the whole amount. Pick the mode that matches what you have, your hourly rate, a paystub total, or the code TT figure from your W-2. US federal, tax years 2025 to 2028.
How the overtime deduction is calculated
Qualified overtime premium = overtime hours × one half × your regular rate. From a paystub total paid at time and a half, the premium is the total divided by 3; at double time, the qualifying part is the total divided by 4. The premium is then capped at $12,500 ($25,000 on a joint return) and reduced by $100 for every full $1,000 of MAGI over $150,000 ($300,000 joint), following Schedule 1-A, Part III. Only overtime required by the Fair Labor Standards Act counts; extra pay required only by state law, a union contract or your employer's own policy does not. Sources: IRS FS-2026-13 (overtime FAQs, PDF) and Schedule 1-A (Form 1040, PDF).
Worked examples
The canary case
$30 an hour, 200 overtime hours at time and a half.
Premium $3,000, deduction $3,000 (the full OT pay is $9,000, and only the premium counts)
Phase-out example
Premium at the $12,500 cap, single, MAGI $165,000.
Reduction 15 x $100 = $1,500, deduction $11,000
Double time paystub
Paystub shows $12,000 of double-time overtime pay.
Qualifying premium $12,000 / 4 = $3,000
Frequently asked questions
Is all of my overtime pay tax free now?
My paystub does not show the premium separately. What do I do?
Does overtime required by my state or union contract count?
What if my W-2 has no code TT amount?
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Disclaimer: Estimate only. US federal deductions, tax years 2025 to 2028. This calculator is not tax advice.
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