No Tax on Overtime Calculator (2026)
Workers paid overtime under the Fair Labor Standards Act can deduct the premium part of that pay, up to $12,500 a year ($25,000 for joint filers), for 2025 through 2028. Enter your hourly rate and overtime hours to see the deduction and tax saved.
Tax saved by overtime premium
Federal income tax saved in 2026, assuming $40,000 of regular pay (single) or $80,000 (joint) plus the overtime that produced the premium.
| Overtime premium | Single | Married filing jointly |
|---|---|---|
| $1,000 | $120 | $120 |
| $2,500 | $300 | $300 |
| $5,000 | $600 | $600 |
| $7,500 | $900 | $900 |
| $12,500 | $2,600 | $1,500 |
Frequently asked questions
Which part of my overtime pay is deductible?
Only the premium above your regular rate. At time and a half, if you earn $30 an hour and work 10 overtime hours at $45, the deductible amount is 10 × $15 = $150, not the full $450.
Does state or contract overtime count?
Only overtime required by section 7 of the Fair Labor Standards Act (generally hours over 40 in a workweek for non-exempt employees) counts. Overtime paid only because of state law, a union contract or company policy does not.
Do salaried employees qualify?
Employees who are exempt from FLSA overtime, as many salaried professionals are, receive no qualified overtime and cannot claim the deduction.
Do I still pay Social Security and Medicare on overtime?
Yes. The deduction lowers federal income tax only; payroll taxes and state taxes still apply.
Is there an income limit?
The deduction drops by $100 for every full $1,000 of modified AGI above $150,000 ($300,000 for joint filers). Married couples must file jointly to claim it.