The 2025–2028 “No Tax on Overtime” deduction doesn’t make overtime tax-free — it lets you deduct the time-and-a-half premium from federal income tax. See what it’s worth to you.
The One Big Beautiful Bill Act (OBBBA) lets eligible workers deduct the “half-time” premium of their FLSA overtime from federal income tax for 2025–2028. Enter your numbers to estimate the deduction and what it saves you.
“Other annual wages” is your regular (non-overtime) pay from all jobs. Federal estimate only, standard deduction, no other credits. FICA (Social Security + Medicare) still applies to overtime. Not tax advice.
Under the One Big Beautiful Bill Act (OBBBA), from 2025 through 2028 workers can take an above-the-line federal deduction for the premium half of qualified overtime — the extra 0.5× on top of your regular rate that the Fair Labor Standards Act (FLSA) requires for hours over 40 in a week. If you earn $30/hour and work an overtime hour at $45, the deductible amount is the $15 premium, not the whole $45.
Deductible premium = regular rate × 0.5 × overtime hours
Tax saved ≈ deduction × your marginal federal rate
This is a deduction claimed on your tax return, not a bigger paycheck. Your employer still withholds tax on overtime through the year as usual; the benefit shows up as a lower tax bill or a larger refund when you file. Your W-2 (or a statement from your employer) will report the qualified overtime amount. Because it’s above-the-line, you can claim it whether or not you itemize.
See your full overtime take-home →
No. “No tax on overtime” is a federal income-tax deduction for the time-and-a-half premium (the extra half), not the whole overtime check. Social Security, Medicare, and usually state tax still apply, and the deduction is capped and phases out at higher incomes.
Up to $12,500 of qualified overtime premium if single (or head of household), or $25,000 if married filing jointly. The cap phases down above $150,000 of modified AGI ($300,000 joint).
The FLSA-required premium — the extra 0.5× paid for hours over 40 in a workweek. The calculator uses your rate × 0.5 × overtime hours as the deductible premium.
Roughly the deduction times your marginal federal tax rate. Someone in the 22% bracket deducting $5,000 of premium saves about $1,100 in federal tax. Enter your numbers above for an estimate.
It applies to tax years 2025 through 2028 under current law, unless Congress extends it.
Overtime pay calculator · How overtime is taxed · Double-time pay explained · Hourly take-home calculator