TaxBreakCalc
Sunsets after 2028 · tax years 2025–2028

No Tax on Overtime Calculator

See the federal income tax you save on your overtime under the 2026 OBBBA deduction — calculated from your hours and rate, with the cap and income phase-out applied. The number the AI box can’t run.

✓ Verified 2026-06-22 · IRS · Tax Foundation · CRS · pending CPA sign-off
Estimated federal income-tax saved
$1,190 /yr
On $5,408 of qualified overtime (the half-time premium). Deduction $5,408 after cap + phase-out at your 22% bracket.
Phase-out under the $150k single cutoff — full deduction applies. FICA still applies to overtime pay.
See what to do with your savings →

How your savings is calculated

Transparent math, no black box. Here is exactly what the calculator does:

1. qualified OT comp = 0.5 × regular rate × OT hours × weeks
2. deduction = min(qualified OT comp, $12,500 single / $25,000 MFJ)
3. apply MAGI phase-out ($150k/$300k → $0 at $275k/$550k)
4. your savings = deduction × your tax bracket
Why it’s the “half-time premium.” The law defines qualified overtime compensation as the extra half-time (0.5× your regular rate), not your full 1.5× overtime pay. So the deduction — and your savings — apply to that premium, capped at $12,500 / $25,000 MFJ. We show the real, modest number rather than the marketing headline. (IRS FS-2026-01)
FICA still applies. Social Security and Medicare tax are still owed on your overtime pay — this deduction is income-tax only.

Do you qualify?

Likely qualifies ✅

Hourly, non-exempt employees whose overtime is required under the Fair Labor Standards Act (FLSA) — for example retail, warehouse, manufacturing, food service, and many healthcare and delivery workers.

Likely does not ❌

Salaried/exempt employees, independent contractors for this purpose, and workers whose “overtime” is paid only under a collective-bargaining agreement without an FLSA overtime requirement.

Tip income and tips have a separate but similar deduction — see no tax on tips (coming soon).

Ready to file? Compare tax software

You just computed your deduction — the next step is claiming it. These handle the OBBBA overtime line on your return:

TurboTax

Guided interview walks you through new OBBBA deductions. Best for full-service filers.

FreeTaxUSA

Free federal e-file; low-cost state. Good for confident DIY filers on a budget.

TaxSlayer

Tiered plans by situation; supports overtime and tip deduction entry.

TaxAct

Step-by-step with deduction discovery; price-lock promise.

Affiliate disclosure: we may earn a commission from these links at no cost to you. We list several so you can compare — this is help, not a single hard sell.

Questions, answered

How much of my overtime is tax-free?

Under the 2025–2028 OBBBA provision, you can deduct up to $12,500 of qualified overtime compensation ($25,000 married filing jointly). "Qualified overtime" is the half-time premium — 0.5 × your regular rate × your overtime hours. The deduction lowers your taxable income; it does not make all overtime pay tax-free.

Does this wipe out all tax on my overtime?

No. It is an income-tax deduction on the overtime premium, capped at $12,500/$25,000 and phased out at higher incomes. FICA taxes (Social Security 6.2% + Medicare 1.45%) still apply to your overtime pay in full.

Do I qualify for the no-tax-on-overtime deduction?

You generally qualify if you are an FLSA-covered, non-exempt employee whose overtime is required under the Fair Labor Standards Act. Salaried/exempt employees and overtime paid only under a collective-bargaining agreement generally do not qualify.

Is there an income limit?

Yes. The deduction phases out as your modified adjusted gross income (MAGI) rises: it starts reducing at $150,000 (single) / $300,000 (MFJ) and reaches $0 at $275,000 / $550,000.

When does no tax on overtime take effect, and when does it end?

It applies to tax years 2025 through 2028 and sunsets after 2028 unless Congress extends it.

Methodology & sources

Figures are verified as of 2026-06-22 against IRS guidance and the statute, and re-checked weekly. The calculator implements the statutory definition of qualified overtime compensation (the FLSA half-time premium), the deduction caps, and the MAGI phase-out. The math is pending CPA sign-off — treat results as estimates, not tax advice.

Sources

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