Tax Years 2025–2028
No Tax on Overtime
This is a temporary federal income tax deduction. It does not make all overtime pay completely tax-free.
Important
The name is misleading. The deduction generally applies to the qualified overtime premium — not to every dollar you earn working overtime.
Key details
- What it applies to
- The deduction generally applies to the qualified overtime premium required under the Fair Labor Standards Act — for example, the extra 0.5 portion of time-and-a-half overtime.
- Maximum deduction
- $12,500, or $25,000 for married filing jointly.
- Income phase-out
- The deduction begins phasing out above $150,000 MAGI for single filers and $300,000 for joint filers.
- Other rules apply
- Other eligibility and reporting requirements apply.
What to save or bring to your appointment
- Your W-2 from each employer
- Pay statements showing overtime hours and premium pay, if you have them
- Any employer-provided summary of qualified overtime compensation
Download the document checklist (PDF) →
Official IRS information
This page is general educational information and is not tax advice for your particular situation. These rules carry additional eligibility and reporting requirements. See the official IRS information linked above, or contact Borinken Tax to talk through your circumstances.
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Questions about how this applies to you?
Every situation is different. Borinken Tax can review your circumstances and explain what actually applies to you — in English or Spanish.