No Tax on Overtime Calculator

You can deduct the premium “half” of FLSA overtime pay — up to $12,500 ($25,000 on a joint return) per year, for tax years 2025–2028. Not your whole overtime pay: only the part above your regular rate, and only the part federal law (the FLSA) requires.

Rules verified against IRS Fact Sheet FS-2026-13 — last verified October 26, 2026

Quick answer

Qualified overtime compensation is only the FLSA-required premium: overtime hours × ½ × your regular rate. The deduction is capped at $12,500 ($25,000 if married filing jointly) and is claimed on Schedule 1-A, line 21. Extra pay required only by an employer policy or union contract does not count.

How do you want to enter your overtime?

From my hours and pay rate I know my qualified amount

Regular hourly rate ($)

FLSA overtime hours for the year Hours over 40 in a workweek that the FLSA requires your employer to pay at time-and-a-half. Do not count extra hours paid only by company policy or a union contract.

Whatever multiple your employer pays — time-and-a-half, double time — the qualified amount is the same: hours × ½ × regular rate (FS-2026-13, Q16).

Amount in Box 12, code TT on your W-2 ($, optional — 2026 and later) If your W-2 shows a smaller code TT amount than your records support, the reported amount is your ceiling until a Form W-2c corrects it.

My overtime includes holiday or weekend premiums my employer pays by policy or contract Those premiums are not qualified overtime unless the FLSA requires them — we'll flag what that means for your numbers.

Filing status

Your modified adjusted gross income (MAGI) ($) The deduction phases out above $150,000 ($300,000 joint).

Your marginal federal tax rate (%) — optional, for the savings estimate

Tax year

The IRS worked example (FS-2026-13, Q16)

An employee earning $20/hour works 50 hours in a week, and the employer pays double time for the 10 overtime hours — $400 of overtime pay. The FLSA only required $300 for those hours ($200 straight time + a $100 premium). So the qualified overtime compensation is $100: the “half” in the required time-and-a-half. Try it above: rate $20, 10 overtime hours → $100.

Who cannot claim it

If you are exempt from FLSA overtime (for example, most salaried executive, administrative, and professional employees), you receive no qualified overtime compensation — even if your employer voluntarily pays you extra for long weeks. The same applies to employee-owners with at least a 20% stake who actively manage the business (FS-2026-13, Q4–Q5). And if you are married, you must file jointly (Q25).

Estimates only — not tax advice. This calculator follows the IRS rules cited on this page. Confirm important figures with the IRS source or a tax professional.

Key terms: Qualified overtime · Regular rate · FLSA · MAGI · Code TT — full glossary