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No tax on overtime — my deduction for 2026
Qualified overtime (the “half” of time-and-a-half), the $12,500 / $25,000 limit, the phase-out and the tax you save
Name: [YOUR NAME]
City and state: [CITY, STATE]
Prepared on: [DATE]
1. Your numbers
What Your number
Filing status [CHOOSE ONE]
Your regular hourly rate $ [AMOUNT]
Overtime hours in a typical week (over 40) [NUMBER]
Weeks with overtime in 2026 [NUMBER]
Total income for 2026 (AGI), overtime included $ [AMOUNT]
2. From overtime pay to tax saved
Step Result
Overtime pay at time-and-a-half (1.5 × rate × hours) [RESULT]
Qualified overtime: the “half” (0.5 × rate × hours) [RESULT]
Up to the yearly limit [RESULT]
Phase-out: $100 for each full $1,000 of income over $150,000 ($300,000 joint) [RESULT]
Your deduction (Schedule 1-A) [RESULT]
Federal income tax without the deduction [RESULT]
Federal income tax with the deduction [RESULT]
Federal income tax you save [RESULT]
Saved per dollar deducted (your bracket) [RESULT]
The rules (checked October 21, 2026) • Deduct the overtime premium the FLSA requires — the “half” of time-and-a-half — for 2025–2028. • Up to $12,500 ($25,000 joint); $100 less for each full $1,000 of MAGI over $150,000 ($300,000 joint). • SSN required; married couples must file jointly. Claimed on Schedule 1-A with the standard deduction. • Social Security and Medicare still apply; state income tax depends on your state — check your state tax agency. Check at the start of the year.
3. Before you claim it
Done Check
☐ Your 2026 W-2 shows qualified overtime in box 12, code TT (or a separate statement)
☐ You are paid hourly or are otherwise non-exempt under the FLSA
☐ Only the “half” counts — not the full 1.5 × pay, and not double-time above the FLSA premium
☐ Overtime required only by state law (e.g. daily overtime) is left out
☐ Married? You file jointly — married filing separately cannot claim it
☐ Put the deduction into the tax refund estimator as an extra deduction
An estimate, not tax advice. IRS guidance on qualified overtime compensation, Schedule 1-A and Rev. Proc. 2025-32, checked October 21, 2026. Check at the start of the year.