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No tax on overtime calculator

Enter annual FLSA overtime, filing status and modified adjusted gross income to estimate your deduction. Confirm the eligibility boxes and optionally enter a marginal tax rate.

Inputs
$
Use combined MAGI for a joint return. AGI plus excluded foreign earned/housing, Puerto Rico and American Samoa income.
$
Use the FLSA regular rate, which can include bonuses. For varying rates or two earners, use the combined known qualified premium.

Results

Estimated qualified overtime deduction
$3,000.00
Entered / calculated overtime premium
$3,000.00
Annual deduction cap
$12,500.00
Income phase-out reduction
$0.00
  • Illustrative inputs are prefilled; confirm eligibility. This deduction does not remove Social Security or Medicare tax.

Results update as you type. The share link stores your inputs after the # in the address, which is not sent to our server, but anyone you send it to can read them.

This is a general estimate for information only, not tax, legal or financial advice. Real rules have more conditions than a calculator can show, so check the official source below or a qualified professional for your situation.

How it works

The deduction applies to tax years 2025–2028. Only the FLSA-required premium above the regular rate qualifies. For ordinary time-and-a-half overtime, that is half the regular rate multiplied by overtime hours, or one third of total pay for those overtime hours. Use the known-premium method for combined earners or varying rates.

premium = regular hourly rate × annual overtime hours × 0.5 base = min(qualified premium, annual cap) reduction = floor(max(0, MAGI − threshold) ÷ 1,000) × 100 deduction = max(0, base − reduction)

Schedule 1-A, Part III sets a $12,500 cap, or $25,000 on a joint return, and a $150,000 MAGI threshold, or $300,000 jointly. The reduction uses complete $1,000 steps. It reduces the capped actual premium, not just the maximum cap. Ineligible returns receive zero.

No intermediate monetary values are rounded; only the phase-out step is rounded down as required. Displays round to cents. Rough savings equal the deduction multiplied by your entered percentage divided by 100; no tax rate is assumed.

Worked examples

$30 regular rate and 200 annual overtime hours

A single filer with $80,000 MAGI has $30 × 200 × 0.5 = $3,000 of qualified premium and deduction. At an illustrative 22% marginal rate, rough federal savings are $660.

Phase-out uses whole steps

A single filer with $12,500 qualified premium and $151,999 MAGI has one complete $1,000 step above $150,000. The $100 reduction leaves a $12,400 deduction.

Joint return with $90,000 total time-and-a-half OT pay

The premium is $90,000 ÷ 3 = $30,000. The joint cap limits it to $25,000. At $320,000 combined MAGI, 20 steps remove $2,000, leaving a $23,000 deduction.

Frequently asked questions

Is all overtime pay tax-free?
No. The deduction covers only the qualifying FLSA premium. The base pay for overtime hours remains outside this deduction. Social Security and Medicare tax treatment does not change.
Does double-time or weekend pay qualify?
Extra pay required only by a contract, employer policy or state law does not qualify by itself. If overtime also satisfies FLSA requirements, only its FLSA-required premium qualifies. Do not put double-time pay into the 1.5× total-pay field; use the known qualified premium.
Can I claim it with the standard deduction?
Yes. Eligible taxpayers can claim the overtime deduction whether they itemize or use the standard deduction. It reduces taxable income, not AGI.
Can married filing separately claim it?
No. Married taxpayers must file jointly. Each included overtime earner needs a Social Security number valid for employment and issued before the return due date, including extensions. Do not enter an SSN in this calculator.
When does the deduction reach zero?
For the full $12,500 non-joint cap, it reaches zero at $275,000 MAGI. For the full $25,000 joint cap, it reaches zero at $550,000. Smaller qualified premiums phase out sooner. The first $100 reduction occurs at $151,000 or $301,000 jointly.
Where do I find qualified overtime?
Use employer reporting and records of FLSA overtime. Notice 2025-69 provides special methods for 2025, when forms did not separately report the premium. The hours and total-pay options here estimate ordinary time-and-a-half pay; they do not establish FLSA eligibility or replace year-specific reporting instructions.

Sources

Last reviewed 2026-11-14; next review due by 2027-01-15. The method is written out above so you can check our math.