No Tax on Overtime Calculator
Enter your hourly rate, typical overtime hours, total income and filing status. You get the qualified overtime premium for the year, the deduction after the cap and phase-out, and the federal tax it saves at your bracket.
All wages including overtime, plus other income, for the phase-out and bracket.
Only some states conform; enter 0 if yours taxes overtime as usual.
Federal tax saved
$1,056
$4,800 deduction × 22% bracket
If your state conforms
$240
at 5% state rate
Qualified overtime (premium)
$4,800
the 0.5× half of $14,400 overtime pay
Cap and phase-out
$12,500
no phase-out under $150,000
Only the premium portion counts: at time and a half, that is one-third of your overtime pay. Social Security and Medicare taxes still apply to all of it. The deduction is claimed on your return (it is not removed from withholding), for tax years 2025 through 2028, and requires your employer to report qualified overtime on your W-2.
Qualified overtime premium per year, by rate and weekly overtime
Assumes 48 weeks with overtime. Bold cells are at or over the $12,500 single-filer cap.
| Rate | 4 OT h/wk | 6 OT h/wk | 8 OT h/wk | 10 OT h/wk | 12 OT h/wk |
|---|---|---|---|---|---|
| $18/h | $1,728 | $2,592 | $3,456 | $4,320 | $5,184 |
| $22/h | $2,112 | $3,168 | $4,224 | $5,280 | $6,336 |
| $25/h | $2,400 | $3,600 | $4,800 | $6,000 | $7,200 |
| $30/h | $2,880 | $4,320 | $5,760 | $7,200 | $8,640 |
| $35/h | $3,360 | $5,040 | $6,720 | $8,400 | $10,080 |
| $40/h | $3,840 | $5,760 | $7,680 | $9,600 | $11,520 |
Tax saved on a $10,000 deduction, by income (single)
| Total income | Marginal rate | Phase-out reduction | Deduction allowed | Federal tax saved |
|---|---|---|---|---|
| $40,000 | 12% | — | $10,000 | $1,200 |
| $60,000 | 12% | — | $10,000 | $1,200 |
| $85,000 | 22% | — | $10,000 | $2,200 |
| $120,000 | 24% | — | $10,000 | $2,400 |
| $160,000 | 24% | −$1,000 | $9,000 | $2,160 |
| $200,000 | 24% | −$5,000 | $5,000 | $1,200 |
| $250,000 | 32% | −$10,000 | $0 | $0 |
2025 federal brackets and standard deduction. The marginal rate is on income after the standard deduction; a large deduction can straddle two brackets, which slightly lowers the real saving.
What it does not do
- Payroll taxes still apply. Social Security (6.2%) and Medicare (1.45%) come out of every overtime dollar as before.
- Your paycheck does not change. Withholding continues as normal; the deduction reduces your tax at filing, so it shows up as a bigger refund or smaller balance due.
- State tax usually still applies. A few states conform to federal taxable income and pass the deduction through; most do not, and some have enacted their own versions.
- It ends after 2028 unless extended, and it needs the qualified amount reported on your W-2, so check your form.
Frequently Asked Questions
Is overtime really tax-free now?
Partly. For tax years 2025 through 2028, the premium portion of overtime -- the extra half in time-and-a-half, not the whole overtime paycheck -- is deductible from federal taxable income, up to $12,500 a year ($25,000 married filing jointly). Social Security and Medicare taxes still apply, most states still tax it, and the deduction is claimed on your return rather than removed from your paycheck.
How much will I save?
The deduction times your marginal federal rate. Someone earning $25 an hour with 8 hours of overtime a week for 48 weeks has $4,800 of qualified overtime premium; at $70,000 total income that is in the 22% bracket, so about $1,056 off their federal tax. The calculator does this for your numbers.
What counts as qualified overtime?
Overtime required by the Fair Labor Standards Act -- pay for hours over 40 in a week -- and only the amount above your regular rate. If you earn $20 an hour and $30 for overtime, $10 of each overtime hour qualifies. Contractual overtime beyond what the FLSA requires, double-time premiums under state law, and overtime for exempt employees who get it by policy do not count. Your employer reports the qualified amount on your W-2.
What is the income phase-out?
The deduction shrinks by $100 for every $1,000 of modified adjusted gross income over $150,000 (single) or $300,000 (joint). A single filer at $200,000 loses $5,000 of the $12,500; at $275,000 it is gone. Modified AGI includes all wages, so the overtime itself counts toward the threshold.
Do I need to itemize?
No. It is a deduction available whether you itemize or take the standard deduction, which is why it is worth its full amount to almost everyone who qualifies. You do need a Social Security number and, if married, to file jointly.
These calculators apply the federal FLSA overtime rules, the 2025 federal overtime deduction as enacted, and standard pay-period arithmetic. They are estimates, not payroll, tax or legal advice: your state's rules, your employer's policy and your full tax return decide the real figures. Exempt employees get no overtime regardless of what the calculator shows.