No tax on overtime calculator
No Tax on Overtime Calculator 2026
Estimate the 2026 federal overtime premium deduction, MAGI phaseout, and potential income-tax savings from qualified overtime compensation. Social Security, Medicare, state tax, local tax, and payroll deductions can still apply.
Overtime premium deduction estimate
This page becomes an interactive calculator after JavaScript loads. The static example uses a $32 hourly rate, 8 overtime hours per week, 50 overtime weeks, single filing status, and $78,000 MAGI.
For that example, estimated qualified overtime compensation is $6,400, the allowed federal deduction is $6,400, and estimated federal income-tax savings at a 22% marginal rate is $1,408.
What counts as qualified overtime
IRS guidance defines qualified overtime compensation as FLSA-required overtime pay above the regular rate. For time-and-a-half overtime, that generally means the half-time premium, not the full overtime check.
No tax on overtime examples
| Scenario | Qualified premium | Allowed deduction | Estimated federal savings |
|---|---|---|---|
| Moderate overtime | $3,125 | $3,125 | $688 |
| Heavy time-and-a-half | $10,000 | $10,000 | $2,200 |
| Cap-limited estimate | $26,000 | $12,500 | $2,750 |
| Joint filer example | $20,625 | $20,625 | $4,950 |
No tax on overtime accuracy notes
- Rules may change as the IRS updates forms, instructions, transition relief, and reporting guidance.
- This is not tax advice, legal advice, payroll advice, or a filed tax-return calculation.
- Last updated: 2026-06-23.
- References include IRS guidance, Public Law 119-21, and mainstream tax platforms for plain-English cross-checks.
Overtime deduction sources
Common questions
Does no tax on overtime apply to the full overtime paycheck?
No. The IRS definition focuses on the FLSA-required pay above the regular rate, generally the half-time premium in time-and-a-half overtime.
What is the 2026 no tax on overtime deduction limit?
The maximum annual deduction is $12,500 per return, or $25,000 for joint filers, before MAGI phaseout.
Does the overtime deduction remove Social Security and Medicare tax?
No. This calculator treats the provision as a federal income-tax deduction. FICA, state tax, local tax, and regular payroll deductions may still apply.
Can married filing separately claim no tax on overtime?
IRS guidance says married taxpayers must file a joint return to claim the deduction.
Should I use the reported qualified overtime field?
Use it when a W-2, 1099, payroll portal, or employer statement reports qualified overtime compensation. Otherwise the calculator estimates the amount from hourly rate, overtime hours, and weeks worked.