2026 tax year · updated Oct 10, 2026

No tax on overtime calculator

How much the 2026 overtime deduction saves you, from your hourly rate and overtime hours.

Federal income tax you save

$450

from a $3,750 overtime deduction (2026)

Overtime pay (300 hours): $11,250
Qualified overtime (the half-time premium): $3,750
Deduction after the cap and income limit: $3,750
Your top federal bracket: 12%
Total wages assumed: $63,250

The deduction is not capped or reduced at this income.

Still paid on your overtime: $861 of Social Security and Medicare, plus any state income tax. The saving comes when you file, unless you update your Form W-4 (step 4(b)).

Assumes wages only, the standard deduction and no credits; regular pay is your hourly rate × regular hours × 52 weeks. Deduction for tax years 2025–2028. Estimate for information only, not tax advice.

How the calculator works

Qualified overtime. Overtime hours × half your regular rate. That is the premium the Fair Labor Standards Act requires; the rest of your overtime pay, and any double time above time-and-a-half, does not count.
The cap. At most $12,500 per return, $25,000 if married filing jointly.
The income limit. $100 less for each full $1,000 of modified adjusted gross income above $150,000 ($300,000 joint).

The saving is your 2026 federal income tax with and without the deduction, using the 2026 brackets and standard deduction. Married couples must file jointly to claim it, and the worker needs a Social Security number valid for work.

Examples for single filers

No tax on overtime deduction and federal tax saved, 2026, single filers
Hourly rate	Overtime	Overtime pay	Deduction	Tax saved
$18	5 h/week × 40 weeks	$5,400	$1,800	$216
$25	8 h/week × 48 weeks	$14,400	$4,800	$576
$35	12 h/week × 50 weeks	$31,500	$10,500	$2,310
$55	15 h/week × 50 weeks	$61,875	$9,900	$2,376

Each example assumes a 40-hour regular week all year, time-and-a-half, wages only and the standard deduction. Social Security, Medicare and state income tax on overtime do not change. For who qualifies, double time, W-2 code TT and state taxes, read no tax on overtime, explained. To see the deduction in your whole tax picture, enter the premium in the income tax calculator or the take-home pay calculator.

Sources: IRS Schedule 1-A (Form 1040) 2026 draft, Part III; IRS Fact Sheet FS-2026-13, questions and answers on the deduction for qualified overtime compensation. See our methodology.

Frequently asked questions

How do I calculate my qualified overtime?

Multiply your overtime hours (hours over 40 in a workweek) by half your regular hourly rate. At $20 an hour, each overtime hour adds $10 of qualified overtime. If you are paid time-and-a-half, that is one third of your overtime pay. From 2026, your employer reports the amount on your W-2 in box 12 with code TT.

Is the overtime deduction limit per person or per return?

Per return: $12,500, or $25,000 on a joint return, whether one or both spouses worked overtime.

At what income does the overtime deduction phase out?

It shrinks by $100 for every $1,000 of modified adjusted gross income above $150,000 ($300,000 joint). A full $12,500 deduction is gone at $275,000 for single filers and $25,000 at $550,000 for joint filers.

When do I get the money from no tax on overtime?

When you file your federal return, as a lower tax bill or a bigger refund. To get it during the year instead, give your employer a new Form W-4 that accounts for the deduction in step 4(b).

Explainer · PaychecksNo tax on overtime, explained: How the overtime deduction works in 2026: only the premium counts, up to $12,500 ($25,000 joint), paychecks are still taxed, and how much it saves.