The “no tax on overtime” deduction, worked out exactly the way Schedule 1-A works it out. Only the overtime premium the federal Fair Labor Standards Act (FLSA) requires — the “half” of time-and-a-half — counts, up to $12,500, or $25,000 on a joint return, for tax years 2025 through 2028.
Was this overtime premium required by federal law (the FLSA)?
Overtime that exists only under a state law (such as California daily overtime), a union contract or company policy does not count — IRS FS-2026-01 is explicit. Most hourly, non-exempt employees are FLSA-covered.
The premium is the extra half above your regular rate. If you enter total overtime pay instead, a third of it is counted as the premium — exact when the overtime was paid at time-and-a-half.
For most people MAGI is simply your AGI (Form 1040, line 11) — the Schedule 1-A version only adds back a few foreign-income exclusions. Include the income you are deducting; the phase-outs run off this figure.
Your overtime deduction
$6,000
From $6,000 of FLSA overtime premium at a MAGI of $62,000 (Single, tax year 2025).
Counted after the cap
$6,000
Your cap
$12,500
Phase-out cut
−$0
You deduct
$6,000
Your MAGI is $62,000. The deduction is whole until $150,000 and fully gone at $275,000.
| Line | Amount |
|---|---|
| Qualified overtime premium — only the FLSA “half” counts line 14c | $6,000 |
| Deduction cap for your filing status line 15 | $12,500 |
| Your MAGI line 3 | $62,000 |
| Phase-out starts at line 17 | $150,000 |
| Income over the threshold line 18 | $0 |
| Full $1,000 steps over the threshold line 19 | 0 |
| Phase-out cut ($100 per step) line 20 | −$0 |
| Your overtime deduction line 21 | $6,000 |
Four rules decide this deduction. All four come straight from the statute and the IRS guidance — nothing here is a rule of thumb.
Time-and-a-half pays your regular rate plus a half. The regular-rate part is ordinary wages; the deduction covers only the premium half the FLSA requires. Paid double-time? Still only the FLSA-required half counts.
Source: IRS FS-2026-01 — Questions and answers about the deduction for qualified overtime compensation.The premium must be compensation the Fair Labor Standards Act itself requires — broadly, for hours past 40 in a week for non-exempt employees. State-law overtime (California’s daily rules) and contract overtime are excluded.
Source: IRS FS-2026-01.The deduction is capped per return: $12,500, doubled to $25,000 if you file jointly. Two earners on one joint return share the one $25,000 cap.
Source: Schedule 1-A (2025), Part III, line 15.From MAGI of $150,000 ($300,000 joint), the deduction loses $100 for each full $1,000 you are over — a partial thousand is ignored, which is why $150,999 of MAGI costs nothing and $151,000 costs exactly $100.
Source: Schedule 1-A (2025), Part III, lines 17–20.A single filer earns $6,000 of FLSA overtime premium in 2025 — say 400 overtime hours at a $30 regular rate, where the premium half is $15 an hour. Her MAGI is $62,000. Schedule 1-A Part III takes the smaller of her premium or the $12,500 cap ($6,000), compares MAGI with the $150,000 threshold (she is $88,000 under it, so the phase-out cut is $0) and gives her a $6,000 deduction on line 21.
Now move her MAGI to $200,000: the excess is $50,000, which is 50 full $1,000 steps, so the cut is $5,000 and the same premium yields a $1,000 deduction. At $275,000 of MAGI the cut reaches the full $6,000 and the deduction is gone. The calculator above runs exactly this arithmetic — try those figures in it.
The three ways this deduction comes back $0 — the calculator tests all of them:
The Schedule 1-A caution is blunt: if you are married, you must file jointly. A separate return cannot claim the deduction at all.
Premiums owed only under a state law, a collective bargaining agreement or an employer’s own policy are not qualified overtime compensation, however they are labelled on the pay stub.
At $275,000 of MAGI (single, at the maximum premium) or $550,000 joint, the $100 steps have eaten the whole deduction.
No — only the premium: the extra “half” above your regular rate that the FLSA requires. If you were paid $45 an hour for overtime on a $30 regular rate, $15 of each hour is premium. That is why this calculator can take your total overtime pay and count a third of it — at time-and-a-half, the premium is exactly a third of the overtime pay.
No. California-style daily overtime, and any overtime owed only under state law or a contract, is excluded — the IRS confirmed this in FS-2026-01. Only the premium for FLSA-required overtime (federal law, typically past 40 hours a week) qualifies.
No. The overtime deduction is claimed on Schedule 1-A and reduces your taxable income whether you take the standard deduction or itemize.
For 2025, employers were not required to report it separately, and the IRS allows a reasonable method — most people work it out from a final pay stub showing overtime hours and rates. From 2026, reporting becomes structured: expect the premium to be separately stated.
It applies to tax years 2025 through 2028 only. It is not currently scheduled to exist for 2029.
Sources & verification. Schedule 1-A (Form 1040) 2025, Part III (irs.gov, form f1040s1a) — every line reference on this page is to that form. IRS FS-2026-01, “Questions and answers about the new deduction for qualified overtime compensation”, and the IRS newsroom page “One Big Beautiful Bill provisions: working families tax cuts for individuals and workers”, for the FLSA-only rule and the caps.
Figures checked 4 November 2026 against the IRS sources above. This calculator is an estimator for planning, not tax advice.
Spotted a figure that looks wrong? Report it — accuracy is the whole point of these pages.
Related: the US Paycheck Calculator shows what overtime does to a paycheck before this deduction; the other four new deductions are in the hub.
100% free · No sign-up · No daily limits · No watermarks · Processed in your browser — files never leave your device
The One Big Beautiful Bill’s deduction for overtime compensation lets you deduct the FLSA-required premium portion of overtime pay — the “half” of time-and-a-half — up to $12,500, or $25,000 on a joint return, for tax years 2025–2028. This calculator checks eligibility first (FLSA overtime only; married filing separately cannot claim), then applies the cap and the Schedule 1-A phase-out.
A single filer with $6,000 of FLSA overtime premium and a MAGI of $62,000 deducts the full $6,000: under the $12,500 cap and the $150,000 phase-out threshold. At a MAGI of $200,000 the same premium deducts $1,000 — 50 full $1,000 steps over the threshold, at $100 a step.
The calculation follows Schedule 1-A (2025) Part III exactly: the deduction starts as the smaller of the qualified premium or the $12,500/$25,000 cap, then loses $100 for each full $1,000 of MAGI over $150,000 ($300,000 joint) — partial thousands are ignored, per line 19 of the form.
No. Only the premium the FLSA requires — the half above the regular rate — counts, even if your employer pays more.
No. FS-2026-01 limits the deduction to FLSA-required overtime; state-law and contract overtime are excluded.
No. The deduction is claimed on Schedule 1-A and works with the standard deduction.
The deduction is not available at all on a separate return — the form’s caution requires joint filing for married couples.
What is missing, broken, or could be better on this tool? Tell us — we read every suggestion.
✅ Thanks — your suggestion has been received. Suggestions like yours shape what we build next.