Skip to content
PaycheckDesk

Tax year 2026

Overtime tax deduction calculator

How much of your overtime is really deductible, and what it is worth when you file. Free, instant, and no email required.

Married filing separately cannot claim these deductions at all, so it is not offered here.

Your straight-time rate, before the overtime multiplier.

Be realistic — vacation and slow months count against this.

A spouse's wages, a second job. Raises your income and can shrink the deduction.

Your estimated qualified overtime deduction

$4,608

Cuts your taxable income by $4,608 when you file.

Federal tax you would save

$553

Roughly $553 more refund, or that much less owed, for tax year 2026.

Your paycheck will not change. Your employer keeps withholding tax the same way. This deduction only shows up when you file your return in early 2027 — it arrives as a bigger refund, not as bigger paychecks.

How we got there

Overtime pay you earn in a year8 hrs × 48 weeks × $24 × 1.5$13,824
Deductible half-time premiumOnly the extra 0.5× premium counts, never the full overtime check$4,608
Statutory cap for your filing status$12,500
Reduced by the income phase-outYou are under the $150,000 threshold, so nothing is lost here$0
Deduction you can claim$4,608

Your year at a glance

Regular wages$49,920
Overtime wages$13,824
Total gross income$63,744
Standard deduction−$16,100
Qualified overtime deduction−$4,608
Taxable income$43,036
Federal income tax$4,916
Social Security & MedicareUnchanged by this deduction — overtime is still fully subject to FICA$4,876

Estimate for tax year 2026 using the published IRS figures. It assumes you take the standard deduction, have no dependents or credits, and that all of your overtime is FLSA-qualifying and separately reported by your employer. It is not tax advice.

What this calculator is doing

The 2025 tax law lets you deduct qualified overtime compensationfor tax years 2025 through 2028. Qualified overtime is not your overtime paycheck. It is only the premium the Fair Labor Standards Act requires on top of your regular rate — the extra half in “time-and-a-half.”

So if you earn $24 an hour and work 8 overtime hours, that week pays $288 in overtime, and $96 of it is qualified. Over 48 weeks that is $4,608 of deduction, not $13,824.

The cap and the phase-out

The deduction is capped at $12,500, or $25,000 if you are married filing jointly. Above $150,000 of modified adjusted gross income ($300,000 joint) it shrinks by $100 for every $1,000 you are over, and it can reach zero.

Why your paycheck stays the same

Withholding tables were not rewritten for this deduction. Your employer takes out the same tax it always did, and the deduction is applied on your return. If you want the money sooner rather than as a refund, the only lever is your Form W-4 — and adjusting it wrongly means owing money later, so that is a conversation for a tax professional.

What your employer has to report

Starting with tax year 2026, qualified overtime has to be reported separately on your W-2. Only overtime reported that way is deductible, which means an employer that does not track it correctly can cost you the deduction. If your pay stub does not separate the premium, ask payroll before January.

Figures on this page are for tax year 2026 and were last checked against the primary sources on 2026-07-31. See our sources. This is an estimate, not tax advice.