What is the overtime tax deduction cap in 2026?

The deduction cap is $12,500 per year for single filers and $25,000 for married filing jointly. The deduction only covers the overtime premium — the extra 0.5x above your regular rate — not total overtime pay.

Who qualifies for the no tax on overtime deduction?

FLSA-covered hourly employees earning overtime qualify. Salaried exempt employees generally do not qualify. The income phase-out begins at $150,000 for single filers. Consult a tax professional to confirm your eligibility.

No Tax on Overtime Calculator — How Much Do You Save in 2026?

Estimate your federal tax savings under the One Big Beautiful Bill Act

Last updated: June 2026

Quick Answer

Under the 2026 One Big Beautiful Bill Act eligible hourly workers can deduct overtime premium pay from federal taxable income — up to $12,500 per year for single filers and $25,000 for joint filers. On $15,000 in overtime earnings at a 22% tax bracket this saves approximately $2,750 in federal taxes. FICA taxes still apply. Valid for tax years 2025–2028 only.

The One Big Beautiful Bill Act signed July 4 2025 created a new above-the-line federal income tax deduction for overtime premium pay. This only covers the premium portion of overtime — the extra 0.5x above your regular rate. Regular wages and FICA taxes are unaffected. This calculator estimates your federal tax savings for tax years 2025 through 2028.

⚠️ Educational purposes only. Not tax advice. Consult a qualified tax professional for advice specific to your situation.

Regular hourly rate ($)

Overtime hours/weekWeeks of overtime/year

Filing statusAnnual regular income ($)

Methodology: Based on 2026 IRS federal tax brackets and FLSA overtime rate definition (1.5× regular pay for hours exceeding 40 per week).