🏛️ OBBBA · Public Law 119-21 · Tax Years 2025–2028

Save Up to $25,000
on Your 2025 Taxes*

The One Big Beautiful Bill Act created a new federal deduction on overtime pay. Calculate your exact savings in 60 seconds — free, no signup required.

*$25,000 is the maximum overtime deduction for married filing jointly filers ($12,500 for single filers). Phase-out begins at $300,000 MAGI for MFJ and $150,000 for single filers. Individual results will vary.

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No Tax on Overtime Calculator

Tax Year 2025 · IRS Notice 2025-69 · IRC §225

Step 1 — Your Information
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Step 2 — Your Overtime Pay in 2025
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hrs
📊 Your Estimated 2025 Savings
$0 Estimated Federal Tax Savings
Deduction Amount
$0
Your Marginal Rate
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How to claim: Report on Schedule 1-A (Form 1040). This is an above-the-line deduction — no need to itemize.
TurboTax handles OBBBA deductions automatically.

Their 2025 software includes all new overtime and tips deductions — calculated correctly and filed on your behalf.

File with TurboTax →

~37% of filers qualify. Simple Form 1040 returns only (no schedules, except for EITC, CTC, student loan interest, and Schedule 1-A).

ALSO FREE

Do You Also Receive Tips?

OBBBA also created a No Tax on Tips deduction worth up to $25,000. Check your occupation eligibility.

Use Tips Calculator →
⚡ Key Facts
  • W-2 hourly (FLSA non-exempt) employees only
  • Deducts the overtime premium — the extra ½ of time-and-a-half pay
  • Above-the-line: no need to itemize deductions
  • FICA/Social Security taxes are NOT reduced
  • Married filing separately receives no deduction
  • Valid for tax years 2025 through 2028
  • Source: IRS Notice 2025-69, IRC §225
🗺️ State Conformity
  • Texas, Florida + 7 othersNo State Tax
  • Most statesConforms
  • DC, IL, MEDecoupled
  • NJ, PA, CA, NY, MNMonitoring
View All 50 States →

Frequently Asked Questions

Everything you need to know about the No Tax on Overtime deduction

Who qualifies for the No Tax on Overtime deduction?

W-2 employees who are "non-exempt" under the Fair Labor Standards Act (FLSA) — meaning your employer is legally required to pay you overtime for hours over 40 per week. Salaried exempt employees, self-employed workers, and independent contractors do not qualify.

What exactly is the "overtime premium"?

When you earn time-and-a-half, your pay splits into regular pay (1×) and the premium (the extra ½). The deduction only covers the premium. If overtime isn't reported separately, the IRS allows dividing total overtime wages by 3 — but only where the overtime was paid at exactly 1.5× the regular rate as required under FLSA. Married filing separately filers receive no deduction.

Does this reduce my Social Security or Medicare taxes?

No. This deduction only reduces federal income tax. FICA taxes (Social Security 6.2% and Medicare 1.45%) are still owed on all wages including overtime pay.

My income is over $150,000. Do I still qualify?

Partially. The deduction reduces by $100 for every $1,000 your MAGI exceeds $150,000 (single) or $300,000 (married filing jointly). At $275,000 MAGI (single) the deduction is fully phased out. Married filing separately filers receive no deduction.

How do I claim this on my tax return?

Report on Schedule 1-A of Form 1040. This is an above-the-line deduction — claim it whether you itemize or take the standard deduction. Major tax software including TurboTax has been updated for the 2025 OBBBA deductions.

How long does this deduction last?

Tax years 2025 through 2028. The deduction was created by the One Big Beautiful Bill Act (Public Law 119-21, signed July 4, 2025). Unless Congress extends it, it expires after the 2028 tax year.