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

How Much Do You Save With
No Tax on Overtime?

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.

$12,500 Max deduction (single)
$25,000 Max deduction (joint)
2025–2028 Deduction years
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No Tax on Overtime Calculator

For Tax Year 2025 (filing by April 15, 2026)

Step 1 — Filing Information
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Step 2 — Your Overtime Pay in 2025
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📊 Your Estimated 2025 Savings
$0 Estimated Federal Tax Savings
Deduction Amount
$0
Your Marginal Tax Rate
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📋 How to claim this: Report your overtime deduction on Schedule 1-A (Form 1040), line for "Qualified Overtime Compensation Deduction." This is an above-the-line deduction — you do NOT need to itemize.
Ready to file? TurboTax handles OBBBA deductions automatically.

They've updated their 2025 software to include all new OBBBA deductions — overtime, tips, and more.

File with TurboTax →
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Do You Also Receive Tips?

The OBBBA also created a No Tax on Tips deduction. Check your occupation eligibility and calculate your additional savings.

Use Tips Calculator →
⚡ Key Facts
  • Only FLSA non-exempt (hourly) W-2 employees qualify
  • Deducts the "overtime premium" — the extra half of time-and-a-half
  • Above-the-line: no need to itemize your taxes
  • FICA/Social Security taxes are NOT reduced
  • Service charges and shift differentials do NOT qualify
  • Valid for tax years 2025 through 2028
  • Source: IRS Notice 2025-69, IRC §225
🗺️ State Conformity
  • Texas, Florida + 7 othersNo State Tax
  • Most rolling statesConforms
  • District of ColumbiaDecoupled
  • MaineDecoupled
  • IllinoisDecoupled
  • New JerseyMonitoring
  • PennsylvaniaMonitoring
View All 50 States →
📬 State Updates

Get notified when your state finalizes its OBBBA conformity decision.

Frequently Asked Questions

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

Who qualifies for the No Tax on Overtime deduction?

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

What exactly is the "overtime premium"?

When you earn time-and-a-half, your pay is split into two parts: regular pay (1×) and the overtime premium (the extra ½). The deduction only covers the premium portion. If your overtime wages are not reported separately, the IRS allows you to divide your total overtime wages by 3 to calculate the premium (per IRS Notice 2025-69).

Does this reduce my Social Security or Medicare taxes?

No. The No Tax on Overtime deduction only reduces your federal income tax. FICA taxes (Social Security at 6.2% and Medicare at 1.45%) are still owed on all wages, including overtime.

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

Partially. The deduction phases out at $1 for every $1 your Modified Adjusted Gross Income (MAGI) exceeds $150,000. So if you're single and earn $155,000, your maximum deduction is reduced by $5,000. At $162,500 (single) the deduction is fully phased out.

How do I actually claim this on my tax return?

Report the deduction on Schedule 1-A (Form 1040). This is an above-the-line deduction, meaning you claim it whether you itemize or take the standard deduction. Most major tax software (TurboTax, H&R Block, TaxAct) has already updated for this deduction.

How long does this deduction last?

The No Tax on Overtime deduction is valid for tax years 2025 through 2028, per the One Big Beautiful Bill Act (Public Law 119-21, signed July 4, 2025). Unless Congress extends it, the deduction will expire after the 2028 tax year.