Overtime Calculator
Overtime pay plus the no tax on overtime deduction for 2025 and 2026
Last updated: October 2026 · IRS Schedule 1-A and FS-2026-13 rules
Your hours
Tax details
A spouse's pay, interest, a second job. Used for the income phase-out.
Weekly gross pay
$1,650.00
$450.00 of it overtime
Overtime deduction
$7,500
of $7,500 qualified premium
Federal tax saved
$1,650
for tax year 2026
Year at a glance
- Annual gross pay
- $84,900
- Annual overtime pay
- $22,500
- Overtime hours over 40 a week
- 10 of 10
- Qualified premium per week
- $150.00
- Income for the phase-out
- $84,900
- Phase-out reduction
- $0
- Federal income tax without the deduction
- $9,848
- Federal income tax with it
- $8,198
The deduction lowers federal income tax only. Social Security and Medicare (7.65%) still apply to all overtime pay. Tax saved assumes the standard deduction and no other deductions.
How overtime pay and the deduction work
Overtime pay is your regular rate times the multiplier times overtime hours. Qualified overtime compensation, the part you can deduct, is half your regular rate for each hour over 40 in a workweek, because that is the premium the Fair Labor Standards Act requires. The straight-time part of overtime pay, and any premium above time-and-a-half, stays fully taxable.
The deduction is the smaller of your qualified overtime or the cap ($12,500, or $25,000 on a joint return). Schedule 1-A then reduces it by $100 for each full $1,000 of modified AGI over $150,000 ($300,000 joint). It is taken whether you itemize or not, and it does not reduce AGI.
Worked example
You earn $30 an hour, work 40 regular hours and 10 overtime hours at time-and-a-half for 50 weeks, and file single for 2026. Weekly pay is $1,200 plus $450 of overtime, or $1,650. For the year that is $84,900. The qualified premium is $15 x 10 hours x 50 weeks = $7,500, under the cap and well below the phase-out. Taxable income falls from $68,800 to $61,300, all of it in the 22% bracket, so the deduction saves $1,650 of federal income tax.
Switch to double time and overtime pay rises to $600 a week, but the qualified premium stays at $7,500 and so does the deduction.
State overtime rules
Some states go further than federal law. California, for example, requires time-and-a-half after 8 hours in a day and double time after 12. Those premiums count toward your pay here, but for the federal deduction only hours over 40 in the week qualify. This calculator counts as qualified only the overtime hours that take your week above 40, so enter daily overtime in the overtime box and the split is done for you.
Key rules to check
- Tax years 2025 through 2028 only. Married filing separately cannot claim it, and a valid Social Security number is required (IRS).
- You must be non-exempt under the FLSA. Many salaried managers and professionals are exempt and do not qualify even if paid overtime.
- From 2026, employers report the qualified amount in W-2 box 12, code TT (IRS FS-2026-13).
Related tools and reading
Read how much no tax on overtime really saves. See the effect on take-home pay with the paycheck calculator, and on your return with the tax refund calculator. To have less withheld now, enter the deduction on a new W-4 with the W-4 withholding calculator. Tipped workers can stack this with the no tax on tips deduction. To compare pay offers, try the hourly to salary calculator, and for the full picture the US tax calculator.
Frequently asked questions
How do I calculate overtime pay?
Multiply your regular hourly rate by your overtime multiplier, then by your overtime hours. At $30 an hour, 10 hours of time-and-a-half is $30 x 1.5 x 10 = $450 on top of your regular pay. Federal law (the Fair Labor Standards Act) requires at least time-and-a-half for hours over 40 in a workweek for non-exempt employees. Your regular rate also has to include most non-discretionary bonuses and shift differentials.
Is overtime tax free now?
Not entirely. For 2025 through 2028 you can deduct "qualified overtime compensation", which is only the premium half of time-and-a-half required by the FLSA, up to $12,500 a year ($25,000 on a joint return). It lowers federal income tax only. Social Security, Medicare and state income tax still apply, and the deduction phases out by $100 for each full $1,000 of modified AGI over $150,000 ($300,000 joint).
Does double time count for the overtime deduction?
Only the FLSA-required part does. If you are paid double time for hours over 40, the IRS counts just the half-time premium as qualified. Its own example: 10 overtime hours at $20 an hour paid at double time earn $200 of premium, but only $100 is qualified overtime compensation (IRS FS-2026-13, Q16).
Does California daily overtime qualify?
Only to the extent the hours are also over 40 in the workweek. California requires overtime after 8 hours in a day and double time after 12, but the federal deduction counts only the premium the FLSA requires. Four 10-hour days earn 8 hours of California overtime, yet the week totals 40 hours, so none of it qualifies for the federal deduction.
Who cannot claim the no tax on overtime deduction?
Married people filing separately, anyone without a Social Security number valid for work, and workers who are exempt from FLSA overtime (many salaried executive, administrative and professional employees), even if their employer pays them overtime voluntarily. Overtime paid only under a union contract or state law, beyond what the FLSA requires, is also excluded.
Where does qualified overtime show up on my W-2?
From 2026, employers report it in box 12 with code TT. For 2025, employers were not required to report it separately, so the IRS lets workers use a reasonable method such as pay stubs to figure the premium portion. The deduction is claimed on Schedule 1-A of Form 1040.