Overtime Calculator
Watch: No tax on overtime: how the deduction works (1:37)
Enter your regular hours and your overtime hours. See your overtime pay at 1.5 times (or 2 times) your rate, what it adds to your take-home pay after taxes, and how much of it you can deduct under the federal overtime deduction for 2025 through 2028.
Your federal overtime deduction (estimate)
Figured from the overtime rows above with the IRS Schedule 1-A Part III steps. Leave a box blank to use the calculator's numbers.
Compare two scenarios
- A (saved)
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An estimate of what your employer withholds, using the IRS percentage method. Your actual paycheck can differ by a few cents because of rounding, or by more if your employer uses other settings.
How we got your number
Each step links to the official document it comes from.
Guides: how to read your pay stub · filling out Form W-4 · biweekly vs semi-monthly pay · why pay rises after the Social Security cap · how much tax is taken out, by state · who gets overtime · 1099 vs W-2 pay
How overtime pay works
Under the federal Fair Labor Standards Act (FLSA), most hourly employees must get at least 1.5 times their regular rate for hours over 40 in a workweek. Some states and some employers pay overtime after 8 hours in a day, or double time. U.S. Department of Labor: Overtime pay.
Overtime is taxed like any other wages: federal income tax, Social Security, Medicare and state tax are all withheld from it. A paycheck with overtime can look heavily taxed because withholding treats it as if you earned that much every pay period. That evens out when you file.
The federal overtime deduction ("no tax on overtime"), 2025 through 2028
The One Big Beautiful Bill Act added a federal income tax deduction for qualified overtime pay for tax years 2025 through 2028. It does not make overtime tax-free. It lowers the income your federal income tax is figured on, up to a yearly limit.
Only the extra half counts
Qualified overtime is the part of FLSA-required overtime pay above your regular rate: the "half" in time and a half. At $25 an hour, an overtime hour pays $37.50 and $12.50 of it is qualified. If your employer pays double time, still only the half the FLSA requires counts: $12.50 of the $50. With the calculator's starting numbers (10 overtime hours every two weeks at $25), that is $125 a paycheck, or $3,250 over 26 paychecks.
Overtime the FLSA does not require does not qualify. That includes extra overtime paid only under state law (for example daily overtime when you did not work over 40 hours that week), a union contract or your employer's own policy, and any overtime paid to workers the FLSA exempts, such as most salaried exempt employees.
Limits and the income phase-out
- Up to $12,500 a year, or $25,000 on a joint return.
- The deduction drops by $100 for each full $1,000 of modified adjusted gross income over $150,000 ($300,000 joint). Example: single, income $170,000, $8,000 of qualified overtime. You are $20,000 over, so the deduction is cut by 20 × $100 = $2,000, leaving $6,000. At the full $12,500 limit it is gone at $275,000 of income ($550,000 joint).
- You need a Social Security number valid for employment on your return. If married, you must file jointly. Married filing separately gets no deduction.
- You can claim it whether you itemize or take the standard deduction. You figure it on Schedule 1-A, Part III, and it goes on Form 1040 line 13b, after your adjusted gross income.
What it does not change
Social Security and Medicare are still taken out of all your overtime pay, because the deduction is only for federal income tax. Your state income tax is figured on your full overtime pay in this calculator; check your own state's rules, which can differ from federal law.
How it shows up on your W-2
Starting with 2026 pay, employers must report your qualified overtime on Form W-2, Box 12, code TT. You can deduct only what is reported, so check that number when your W-2 arrives and ask for a corrected W-2c if it is wrong. For 2025, employers did not have to report it separately and you could work out the amount yourself.
Get the deduction in your paycheck now
Your employer cannot lower your withholding for the deduction on its own. To see it in each paycheck instead of waiting for a refund, give your employer a new Form W-4 with your estimate in Step 4(b). Use our No Tax on Overtime Calculator to fill in the IRS worksheet, or the IRS Tax Withholding Estimator. The overtime deduction estimate beside your results can fill in the worksheet for you. Note that the W-4 worksheet uses a simple cut-off: it counts your overtime only if your income is under $150,000 ($300,000 joint), while the deduction on your return phases out gradually.
Sources: IRS Schedule 1-A (Form 1040), Part III, lines 14-21 · IRS FS-2026-13: Questions and answers on the deduction for qualified overtime compensation (August 2026) · IRS: Tax deductions for working Americans and seniors (2025 through 2028). Checked 2026-10-25.
Overtime Calculator questions
How is overtime pay calculated?
Multiply your hourly rate by 1.5 for each overtime hour (by 2 for double time). The calculator starts with 80 regular hours and 10 overtime hours at $25 an hour; change them to match your paycheck.
Is overtime tax-free now?
No. For 2025 through 2028 you can deduct the extra half of FLSA-required overtime pay from your federal taxable income, up to $12,500 ($25,000 on a joint return). Social Security, Medicare and state taxes still apply to all of it.
How much of my overtime can I deduct?
Only the premium the FLSA requires: half your regular rate for each overtime hour. At $20 an hour, time and a half is $30 and $10 of each overtime hour counts. Double time at $40 still counts only $10.
Who cannot take the overtime deduction?
Workers the FLSA exempts from overtime (most salaried exempt employees), married people filing separately, and people without a Social Security number valid for employment. Above $150,000 of income ($300,000 joint) the deduction shrinks by $100 for every $1,000.
Do I have to itemize to deduct overtime?
No. You can take it with the standard deduction or with itemized deductions. It is figured on Schedule 1-A of Form 1040.
How do I get less tax taken out of my overtime paychecks?
Give your employer a new Form W-4 with your expected deduction in Step 4(b). Your employer cannot adjust withholding for the deduction without it. Our No Tax on Overtime Calculator fills in the IRS worksheet for you.
Is overtime taxed more?
Overtime is taxed at the same rates as regular pay. More tax can come out of a paycheck with overtime because withholding treats that larger paycheck as if you earned it every pay period.