Who can't claim the overtime deduction?

Married people filing separately can't claim it. The deduction shrinks by $100 for every $1,000 of income over $150,000 ($300,000 for joint filers).

No Tax on Overtime Calculator

Q: Is overtime really tax-free?

Not entirely. For tax years 2025 through 2028 you can deduct the extra half-time portion of overtime pay required by federal law (hours over 40 a week), up to $12,500, or $25,000 for married couples filing jointly. It lowers federal income tax only; Social Security, Medicare and most state taxes still apply.

Q: Will I get the overtime deduction in my paycheck?

Usually not automatically. Withholding doesn't know about the deduction unless you account for it on your Form W-4, so most people get it back as part of their refund when they file.

Estimate your 2026 overtime deduction and how much federal income tax it could save you.

Estimated federal tax saved in 2026 $0

Overtime pay this year: $0
Deductible half-time premium: $0
Your overtime deduction: $0
Your top tax bracket: —

See it with your real paychecks

IncomeSync tracks every overtime hour week by week, estimates your year-end refund with the overtime deduction included, and tells you what to change on your W-4.

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How the overtime deduction works

What counts: only the extra half of time-and-a-half for hours over 40 in a workweek, the overtime federal law requires. At $29 an hour that's $14.50 for each overtime hour.
The cap: up to $12,500 a year, or $25,000 for married couples filing jointly.
The phase-out: the deduction shrinks by $100 for every $1,000 of income over $150,000 ($300,000 for joint filers).
Who can't claim it: married people filing separately.
What it doesn't change: Social Security, Medicare and most state income taxes still apply to overtime pay.
When: tax years 2025 through 2028.

Common questions

Is overtime really tax-free?

Not entirely. The deduction removes the premium part of your overtime from federal income tax, up to the cap. Your regular rate for those hours, and other taxes, still apply.

Will I see it in my paycheck?

Usually not. Withholding doesn't know about the deduction unless you account for it on your Form W-4, so most people get it back in their refund when they file.

How accurate is this?

It uses 2026 IRS brackets and the standard deduction, and treats your hourly pay as your only adjustments. It doesn't include itemized deductions, credits, retirement contributions or state tax. Use it for planning, and check your return with a tax preparer or tax software.

An estimate for planning, not tax advice. IncomeSync isn't affiliated with the IRS. Runs in your browser; nothing you enter is stored or sent.