No Tax on Overtime Calculator: Estimate Your Deduction

This no tax on overtime calculator works out your federal qualified overtime deduction. It is a deduction, not tax-free pay: a single filer with $5,000 of qualifying overtime and $80,000 of income deducts the full $5,000. Enter your overtime and income to see the cap, the income reduction and roughly how much income tax it saves.

How to use the no tax on overtime calculator

Choose your filing status and enter your income for the year: your modified adjusted gross income. For most people that is the adjusted gross income on their Form 1040.
Pick how you want to enter your overtime: your hourly pay and overtime hours, your total overtime pay, or the amount your employer reported in box 12 of your W-2 under code TT.
Enter the figures. The result shows the cap, the income reduction, the deduction and a rough estimate of the income tax it saves.
Open “Tax rate for the savings estimate” to change your bracket. It only affects the savings line, not the deduction.

The page address updates as you type, so you can copy the link to save or share a result. For your pay before tax, use the overtime calculator.

What does “no tax on overtime” mean?

It is the popular name for a new federal overtime tax deduction, the qualified overtime deduction. It lets eligible workers subtract the premium part of their overtime pay from taxable income for tax years 2025 to 2028. The overtime pay is still taxed as wages for Social Security and Medicare, and the deduction only lowers the income that is subject to federal income tax.

How to calculate overtime for taxes

To work out the overtime deduction, the tax code (26 U.S.C. 225) and the IRS’s Schedule 1-A set four steps. The calculator follows them in this order, and the cap comes before the income reduction.

Step 1: your qualified overtime

Qualified overtime = ½ × regular rate × overtime hours (over 40 in a workweek)

The IRS counts only the “half” in time and a half. If you only know your total overtime pay, a time-and-a-half total divided by 3 gives the premium, and a double-time total divided by 4 does. Use those two shortcuts as estimates.

Step 2: apply the limit

Limited amount = smaller of qualified overtime or $12,500 ($25,000 if married filing jointly)

This is line 15 of Schedule 1-A.

Step 3: work out the income reduction

Reduction = $100 × the number of full $1,000 steps your income is over $150,000 ($300,000 joint)

Schedule 1-A rounds the number of steps down. An income of $150,999 is zero full steps over $150,000 and costs nothing. Your income here is your modified adjusted gross income, which is your adjusted gross income plus certain excluded amounts such as Puerto Rico income.

Step 4: subtract

Deduction = Limited amount − Reduction (never below $0)

The tax saved is a rough multiplication: deduction × your tax bracket. The calculator shows it as an estimate.

No Tax on Overtime Calculator examples

Example 1: ten overtime hours a week, income of $80,000

A single filer paid $20.00 an hour works 10 overtime hours a week for 50 weeks. Qualified overtime is 0.5 × $20.00 × 10 × 50 = $5,000.00. That is under the $12,500 limit, and $80,000 of income is under $150,000, so the deduction is $5,000.00. At a 22% bracket it saves about $1,100.00 of income tax.

Example 2: total overtime pay of $40,000

Overtime pay of $40,000 at time and a half contains a premium of $40,000 ÷ 3 = $13,333.33. The limit is $12,500, so the deduction is $12,500.00.

Example 3: single, income of $200,500

Take $12,500 of qualified overtime. Income is $50,500 over $150,000, which is 50 full $1,000 steps. The reduction is 50 × $100 = $5,000. Deduction: $12,500 − $5,000 = $7,500.

Example 4: married filing jointly, income of $340,000

Qualified overtime of $25,000 is at the joint limit. Income is $40,000 over $300,000, so 40 steps and a reduction of $4,000. Deduction: $25,000 − $4,000 = $21,000.

Example 5: double time (the IRS’s own example)

A worker paid $20.00 an hour works 50 hours in a week and is paid double time for 10 hours. That is $200.00 of straight pay plus a $200.00 premium, $400.00 in all. The law only required a $100.00 premium, so qualified overtime is $100.00. Enter 10 overtime hours and the calculator gives the same $100.00.

Example 6: over the limit and over the income line, single, income of $154,300

Take $15,200 of qualified overtime. The limit comes first: the smaller of $15,200 and $12,500 is $12,500. Income is $4,300 over $150,000, which is 4 full $1,000 steps; the extra $300 does not count as a fifth. The reduction is 4 × $100 = $400. Deduction: $12,500 − $400 = $12,100. Use your modified adjusted gross income for the income figure, not only your wages, because adjustments such as student loan interest or an HSA deduction lower it.

What counts as qualified overtime

Qualified overtime is overtime pay that the federal Fair Labor Standards Act (FLSA) requires, and only the part above your regular rate. In practice that is the half in time and a half, for hours over 40 in a workweek. A workweek is a fixed period of 168 hours, and each week stands alone, so you cannot average a long week against a short one.

Three things do not count. Pay above what the law requires, such as the second half of double time. Overtime from state or contract rules, such as daily overtime in California or a union agreement, beyond what the federal rule would pay. Overtime for exempt employees. The IRS says someone who is exempt from FLSA overtime gets no qualified overtime, whatever their contract says. If your pay includes a promised bonus, your regular rate rises; the overtime calculator handles that, and the pay raise calculator shows what a raise does to your rate. The tax code also says qualified tips cannot be counted as qualified overtime.

Limits and phase-out at a glance

Deduction limits by filing status
Filing status	Limit	Phase-out starts	Zero at*
Single or head of household	$12,500	$150,000	$275,000
Married filing jointly	$25,000	$300,000	$550,000
Married filing separately	None	–	–

The income columns mean modified adjusted gross income. For the rules in plain language and a table of the deduction at each income, see no tax on overtime explained. *Zero assumes you have the full limit; a qualifying surviving spouse uses the single amounts. If your qualified overtime is smaller, the reduction removes it sooner: $5,000 of qualified overtime for a single filer is gone at $200,000 of income, because $5,000 ÷ $100 = 50 steps of $1,000 above $150,000. At $275,000 the full $12,500 is gone, and at $274,999 $100.00 is left.

What the deduction does not change

It lowers your federal income tax and nothing else. Overtime still counts as wages for Social Security, Medicare and federal unemployment tax, according to the IRS. Employers must keep withholding income tax on overtime unless you give them an updated Form W-4 that accounts for the deduction; the 2026 form has a place for it in step 4(b). So most workers see the benefit as a bigger refund or a smaller bill when they file, not as a bigger paycheck. State tax rules differ, and this page covers the federal deduction only. It is a deduction, not a refund: how much it saves depends on your tax bracket and the rest of your return. That is why this works as an overtime tax calculator for the deduction and the income tax it saves, but it is not an overtime tax refund calculator. Your refund also depends on what was withheld all year, your credits and the rest of your return.

Finding your overtime number

For 2025 pay, the IRS said employers did not have to report qualified overtime separately on the W-2, so you may need your pay records and the Schedule 1-A instructions to work it out. From tax year 2026, employers must report it on the W-2 in box 12 with code TT (code TT can show more than you can deduct, because the limit applies on your return). A worker treated as a contractor for tax purposes but as an employee under the FLSA would see it on a 1099 instead; the IRS calls this rare. The calculator’s “total overtime pay” options are estimates built on the time-and-a-half and double-time rules above, so check them against your employer’s figure when you have it.

How to claim it

Fill out Part III of Schedule 1-A (Form 1040) and attach it to your return. You need a valid Social Security number, and married taxpayers must file jointly. You can claim the deduction whether you itemize or take the standard deduction. The IRS explains the rules on its no tax on overtime page and in its questions and answers. The deduction applies for tax years 2025 through 2028.

No Tax on Overtime Calculator questions

Is overtime completely tax-free now?

No. The law gives a federal income tax deduction for qualified overtime. The IRS says it does not mean overtime is excluded from income, and overtime still counts as wages for Social Security, Medicare and unemployment taxes.

How much overtime can I deduct?

Up to $12,500 a year, or $25,000 on a joint return, and only the premium part of your overtime pay counts. Income above $150,000 ($300,000 joint) reduces it.

Does it apply to salaried workers?

Only if you are paid overtime under the federal Fair Labor Standards Act. Employees who are exempt from FLSA overtime get no qualified overtime, even if a contract or union agreement pays them extra for long hours, according to the IRS.

Do I need to itemize to claim it?

No. The IRS says the deduction is available whether you itemize or take the standard deduction. You claim it on Schedule 1-A (Form 1040).

How does double time work?

Only the part the law requires counts (the time and a half calculator shows the rates). The IRS gives this example: a worker paid $20.00 an hour works 50 hours and is paid double time, so $400.00 for 10 overtime hours. Only $100.00 is qualified overtime, the “half” in time and a half.

Does overtime from a union contract or my state count?

Only up to what the federal law would require. The IRS says overtime paid under a state law, such as daily overtime, or under a union agreement is judged against the federal weekly rule, and just the amount needed to meet that rule is qualified overtime.

Will I still pay Social Security and Medicare tax on overtime?

Yes. The deduction lowers income tax only. The IRS says overtime generally stays subject to employment taxes, including Social Security and Medicare.

Will my paycheck get bigger?

Not automatically. Employers have to keep withholding income tax on overtime unless you hand them a new Form W-4 that accounts for the deduction (step 4(b) on the 2026 form). Without that, the usual result is a larger refund or smaller bill when you file.

Can I claim it if I am married filing separately?

No. The tax code allows the deduction for a married taxpayer only on a joint return. You also need a valid Social Security number.

When does the deduction end?

It applies to tax years 2025 through 2028. The law allows no deduction for a tax year that begins after December 31, 2028.

What this calculator doesn’t do

It is an estimate for the federal income tax only. It does not include state tax, Social Security, Medicare or what your employer withholds.
It cannot tell whether your job is exempt from overtime or whether your overtime meets the federal rule. Your employer’s W-2 figure or a tax professional has the final word.
The “total overtime pay” options assume pay at exactly time and a half or double time. Other arrangements, bonuses and different regular rates change the premium.
It treats your income as the figure you enter. It does not work out your modified adjusted gross income from your return.
Federal employees and some other groups follow special rules that the calculator does not apply.
It covers tax years 2025 through 2028. Sources were checked on October 13, 2026: the IRS no tax on overtime page and questions and answers (updated August 6, 2026), the 2025 Schedule 1-A, and 26 U.S.C. 225. Not tax advice.

Results are estimates for planning, not financial advice. The methodology page explains how every calculator here is built and checked.