By Mudassir Khan
2028 is the final year of the federal overtime deduction under current law. The rules are unchanged, only the premium half of FLSA overtime counts, capped and phased out by income, but after December 31, 2028 the deduction sunsets. Estimate what the last year is worth to you.
Rules verified November 2026 · Sources: IRS, U.S. Department of Labor
2028 is the final year of the federal no tax on overtime deduction under current law: it covers only the premium half of FLSA overtime, capped at $12,500 single or $25,000 joint, phasing out above $150,000 MAGI ($300,000 joint). After December 31, 2028 the deduction expires unless Congress extends it.
Tax year 2028 · IRC §225 · Per current IRS guidance, subject to inflation adjustment
Estimates only. Not tax, legal, or payroll advice. Confirm with your employer or a qualified professional.
Estimate only, not tax advice. Married filing separately cannot claim this deduction. A valid SSN is required, and married couples must file jointly.
2028 figures use the current statutory caps and thresholds per IRS guidance. If the IRS later announces 2028 inflation adjustments, the calculator will be updated. Also planning 2027? See the 2027 calculator.
The deduction was created for tax years 2025 through 2028, and it expires after December 31, 2028, unless Congress extends it or makes it permanent. Practically, that means:
Example 1: a steady overtime year. Single filer, $25/hour, 400 FLSA overtime hours in 2028. Qualified premium = 400 × $25 × 0.5 = $5,000. Under the $12,500 cap, MAGI $70,000 is under the $150,000 threshold, so the full $5,000 is deductible. At the 22% bracket, federal tax saved = $5,000 × 22% = $1,100.
Example 2: head of household, capped and phased out. Head of household, $15,000 of qualified overtime premium, MAGI $200,000. After the $12,500 cap: $12,500. Phase out reduction: MAGI is $50,000 over the $150,000 threshold, so the deduction drops by $5,000. Deduction = $12,500 minus $5,000 = $7,500. At the 22% bracket, federal tax saved = $7,500 × 22% = $1,650.
Example 3: joint filers near the top of the phase out. Married filing jointly, $20,000 of qualified overtime premium, MAGI $320,000. After the $25,000 joint cap: $20,000. Phase out reduction: MAGI is $20,000 over the $300,000 threshold, so the deduction drops by $2,000. Deduction = $20,000 minus $2,000 = $18,000. At the 22% bracket, federal tax saved = $18,000 × 22% = $3,960.
Deduction rules on this page follow IRS guidance on the Working Families Tax Cuts provisions, including the sunset and reporting rules in IRS Fact Sheet FS-2026-13 (August 2026). The overtime itself must qualify under U.S. Department of Labor FLSA rules.
Under current law, yes. The deduction covers 2025 through 2028 and expires after December 31, 2028. Overtime worked in 2029 or later does not qualify unless Congress extends it.
Only the premium portion required by the FLSA, the extra "half" in time and a half. At $25/hour, an overtime hour pays $37.50, of which $12.50 qualifies.
No. As of November 2026 there is no announced 2028 adjustment to the caps or phase out thresholds. The calculator uses current statutory figures and says so.
No. There is no carryforward. The deduction applies only to qualified overtime received in 2028, and 2028 is the last year.
On your 2028 W-2, Box 12, code TT, issued in January 2029. Your deduction is generally limited to what was reported.
No, it's an income tax deduction only. FICA taxes apply to overtime wages in full.
Compare with the 2027 calculator, or read how to claim the deduction for the filing steps. For the full story from 2025 onward, start with the main calculator.