No Tax on Overtime Deduction Calculator (2026)
Estimate your 2026 'No Tax on Overtime' deduction under the One Big Beautiful Bill Act: up to $12,500 ($25,000 married) of qualified overtime premium, with the $150k/$300k MAGI phase-out and your federal tax savings.
- Data verified · July 2026
- Edited by Martín Rodríguez
- Formula verified by automated tests
- Private — runs on your device
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How to use this calculator
Follow this tool’s steps, then review its formula, assumptions, and limits below.
Under the Fair Labor Standards Act (FLSA), overtime is paid at 1.5× your regular rate. Only the extra 'half' — the amount above your normal hourly rate — is the qualified overtime premium the law lets you deduct. If you earn $30/hour and get $45/hour for overtime, the deductible premium is the $15, not the full $45.
Enter your qualified overtime premium for the year, your filing status, and your modified adjusted gross income (MAGI). This tool applies the $12,500 / $25,000 cap, the $150,000 / $300,000 phase-out, and estimates the federal income tax you would save. This is different from an overtime-pay-calculator, which figures your time-and-a-half gross pay.
When to use this calculator
- See how much of your 2026 overtime you can actually deduct.
- Convert your time-and-a-half overtime into the deductible 'premium' portion.
- Estimate the federal income tax the deduction saves you.
- Check whether your income phases out the deduction.
- Compare the deduction cap for single vs married filing jointly.
- Plan withholding for a year with heavy overtime.
- Understand why only the FLSA premium (not all OT pay) qualifies.
- Confirm you still owe payroll and state tax on overtime.
Maximum 2026 overtime deduction by MAGI (single filer)
| MAGI | Phase-out reduction | Max deduction remaining |
|---|---|---|
| $150,000 or less | $0 | $12,500 |
| $175,000 | $2,500 | $10,000 |
| $200,000 | $5,000 | $7,500 |
| $250,000 | $10,000 | $2,500 |
| $275,000 or more | $12,500+ | $0 |
Source: IRS OBBBA overtime deduction (2025-2028). Reduction is $100 per $1,000 of MAGI over $150,000 (single) / $300,000 (married filing jointly). Cap is the qualified premium, not total overtime pay.
How it works
What actually qualifies
Qualified premium = overtime pay − (hours × your regular rate)
= the FLSA 'half' above your normal rate
Deduction cap = $12,500 single / $25,000 married filing jointly
Phase-out = −$100 of deduction per $1,000 of MAGI over the threshold
Threshold = $150,000 single / $300,000 married filing jointlyIf your W-2 reports total overtime wages at time-and-a-half, the premium is one-third of that number (because $45 of the example is $30 base + $15 premium; the premium is 1/3 of $45). For 2026, employers may report your qualified overtime in Box 12 of the W-2 with code 'TT.'
The phase-out, step by step
The deduction drops $100 for every $1,000 your MAGI exceeds the threshold (that is 10% of the excess). A single filer with $160,000 MAGI is $10,000 over $150,000, so the deduction is cut by $1,000.
| MAGI (single) | Reduction | Max deduction left |
|---|---|---|
| $150,000 or less | $0 | $12,500 |
| $160,000 | $1,000 | $11,500 |
| $200,000 | $5,000 | $7,500 |
| $275,000 | $12,500 | $0 (fully phased out) |
What it does NOT remove
This is an income-tax deduction only. Overtime pay is still subject to:
Who can claim it
Disclaimer
Educational estimate of a federal deduction. Marginal-rate savings are approximate and depend on your full return. It does not model state tax, credits, or interactions with other deductions. Confirm your qualified overtime figure (W-2 Box 12, code TT) and consult the IRS or a tax professional.
Example: $10,000 of overtime premium, single, $60,000 MAGI
Frequently asked questions
Is all of my overtime pay tax-free in 2026?
How do I find my 'qualified overtime premium'?
What is the income limit for the overtime deduction?
Do I still pay Social Security and Medicare on overtime?
Can I claim it if I take the standard deduction?
Which years does the deduction apply to?
Do married couples have to file jointly?
How is this different from an overtime pay calculator?
Sources & references
Methodology & trust
Finance calculator with its formula verified automatically against IRS — Questions and answers about the new deduction for qualified overtime compensation, per our editorial policy and methodology.
Updated: July 2026. Parameters are verified periodically against the cited sources.
Calculations run 100% in your browser. We do not store or transmit your data.
Indicative results. For critical decisions, consult a professional.
Rodríguez, M. (2026). No Tax on Overtime Deduction Calculator (2026). Hacé Cuentas. https://hacecuentas.com/en/no-tax-on-overtime-deduction-calculator
Content licensed under CC-BY 4.0 — reuse it citing the source with a link to Hacé Cuentas.