# No Tax on Overtime Calculator 2026 > Free no-tax-on-overtime calculator for 2026. Enter your hourly rate and FLSA overtime hours to find your qualified overtime premium, your deduction (up to $12,500 or $25,000 joint), and your federal tax savings. The no-tax-on-overtime deduction does not cover your whole overtime check. It covers the premium: the extra half-rate that federal law (the FLSA) requires for hours over 40 in a week. Enter your rate and overtime hours to see the qualified amount and what it saves you. *Interactive tool: enter your values at https://toollantern.win/no-tax-on-overtime-calculator-2026/ and results update instantly in your browser.* ## What the deduction actually covers The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, added section 225 to the tax code: a federal income tax deduction for **qualified overtime compensation**, for tax years 2025 through 2028. Qualified overtime is only the **premium portion** of overtime that the Fair Labor Standards Act requires, the "half" in time-and-a-half. If your base rate is $28, you earn $42 for each overtime hour, but only $14 of each hour is deductible. ## Worked example Base rate **$28/hour**, 6 FLSA overtime hours a week for 50 weeks (300 hours), single filer, MAGI $62,000, 22% bracket. - Total overtime pay: $42 x 300 = **$12,600**. - Qualified premium: $14 x 300 = **$4,200**. - Deduction: min($4,200, $12,500) = **$4,200** (no phase-out at this income). - Federal income tax savings: $4,200 x 22% = **$924**. ## The cap and the MAGI phase-out The deduction is capped at **$12,500** per return, or **$25,000** for married couples filing jointly. It shrinks by $100 for every $1,000 of modified adjusted gross income above **$150,000** (single) or **$300,000** (joint). These amounts are fixed in the statute and are not indexed for inflation. ## Overtime that does not qualify - **State-law overtime**, such as California daily overtime after 8 hours, when you did not also work over 40 hours that week. - **Union-contract or employer-policy overtime** beyond what the FLSA requires (for example, overtime paid for weekend work regardless of hours). - The **extra pay in double time**: only the FLSA half-rate premium counts. - Overtime earned by employees who are **exempt** from FLSA overtime (many salaried managers and professionals). ## How it is reported For 2025, IRS Notice 2025-62 gave employers penalty relief, so many 2025 W-2s did not separate qualified overtime; you can use pay stubs and payroll records to work out the premium. Starting with 2026 pay, updated W-2 and 1099 forms report qualified overtime separately, which makes the number easier to find. You need a valid Social Security number, and married couples must file jointly to claim it. It is available whether you itemize or take the standard deduction. ## Payroll and state taxes still apply This is a federal **income tax** deduction only. Social Security and Medicare (7.65% for employees) still apply to every overtime dollar, and state income tax depends on whether your state follows the federal rule. ## More 2026 tax calculators The same law created other temporary deductions with their own tools: the [No Tax on Tips Calculator 2026](__L_no-tax-on-tips-calculator-2026__) (up to $25,000 of tips), the [Senior Bonus Deduction Calculator 2026](__L_senior-bonus-deduction-2026__) ($6,000 per person aged 65 or older), and the [Gambling Losses Tax Calculator 2026](__L_gambling-losses-tax-calculator-2026__). To check your gross overtime pay first, use the [Overtime Pay Calculator](__L_overtime-pay-calculator__). This calculator is an estimate, not tax advice. Whether your overtime is FLSA-required depends on your job classification and pay records; confirm with a tax professional. ## Frequently asked questions ### Is all of my overtime pay tax free? No. Only the premium portion counts: the extra half of your regular rate that the FLSA requires for hours over 40 in a workweek. The base pay for those hours stays taxable. ### How much can I deduct? Up to $12,500 a year, or $25,000 if married filing jointly, reduced by $100 for every $1,000 of MAGI above $150,000 (single) or $300,000 (joint). ### Does California daily overtime count? Only to the extent it is also required by the FLSA. Overtime paid solely because of a state rule (such as daily overtime after 8 hours in a week where you stay under 40) does not qualify. ### Does double time count? Only the FLSA half-rate premium counts. The extra pay above time-and-a-half in a double-time hour is not qualified overtime. ### Do I still pay Social Security and Medicare on overtime? Yes. The deduction reduces federal income tax only. FICA still applies to all overtime pay, and state income tax depends on your state. ### Where do I find my qualified overtime amount? For 2026 pay, updated W-2s and 1099s report it separately. For 2025, employers had penalty relief under Notice 2025-62, so you may need to calculate it from pay stubs: half your regular rate times your FLSA overtime hours. ### Can I claim it if I take the standard deduction? Yes. It is available to itemizers and non-itemizers alike, but you need a valid Social Security number and married couples must file jointly. ### When does the deduction end? It applies to tax years 2025 through 2028 only, unless Congress extends it. --- Interactive version: https://toollantern.win/no-tax-on-overtime-calculator-2026/