By Mudassir Khan
The no tax on overtime deduction does not change your paycheck. It changes your refund when you file. This calculator turns your qualified overtime premium into an estimated 2026 tax refund, applying the deduction caps, your tax bracket, and the income phase out.
Rules verified November 2026 · Sources: IRS, U.S. Department of Labor
Tax year 2026 · IRC §225 · Rules per IRS Notice 2025-69
This is the FLSA "half" only, not your total overtime pay. At $20 an hour, each time and a half hour contributes $10 of premium. Roughly one third of time and a half pay.
Used only to check the phase out. The deduction shrinks by $100 for each $1,000 of MAGI over $150,000 ($300,000 joint).
Estimates only. Not tax, legal, or payroll advice. A deduction saves tax at your marginal rate, it is not a dollar for dollar credit. Confirm with a qualified professional.
Want the full deduction breakdown? Try the no tax on overtime calculator for caps, phase out detail, and W-2 reporting.
Three steps stand between your overtime hours and the refund number above:
Refund ≈ min(premium, cap) × marginal bracketCap: $12,500 single · $25,000 married filing jointly| Step | Math | Amount |
|---|---|---|
| Overtime premium earned | given | $6,000 |
| Deduction (under the $12,500 cap) | , | $6,000 |
| Estimated refund | $6,000 × 22% | $1,320 |
| Step | Math | Amount |
|---|---|---|
| Overtime premium earned | given | $30,000 |
| Deduction (capped at $25,000) | min($30,000, $25,000) | $25,000 |
| Estimated refund | $25,000 × 24% | $6,000 |
$5,000 of premium produces no deduction here, that is the cap at work.
| Step | Math | Amount |
|---|---|---|
| Overtime premium earned | given | $4,000 |
| Deduction (under the $12,500 cap) | , | $4,000 |
| Estimated refund | $4,000 × 12% | $480 |
Same $4,000 of premium is worth twice as much to a 24 percent bracket filer, the bracket is the multiplier.
Deduction rules on this page follow IRS guidance on the Working Families Tax Cuts provisions, including the 2025 to 2028 overtime deduction and IRS Notice 2025-69. The overtime itself must qualify under U.S. Department of Labor FLSA rules.
No. Nothing changes on your paycheck. You claim the deduction when you file your return, and it reduces the tax you owe or increases your refund at filing time.
Only the extra "half" of time and a half that the FLSA requires. At $20 an hour, one overtime hour pays $30, and $10 of it is the qualified premium. State, contract, or voluntary premiums above that do not count.
Two reasons. First, only the premium portion is deductible, roughly one third of time and a half pay. Second, a deduction saves tax at your marginal bracket, so a $5,000 deduction at the 22 percent bracket is worth $1,100, not $5,000.
Generally no. It is a federal income tax deduction. Most states still tax overtime normally, and Social Security and Medicare taxes apply to overtime wages in full.
After you file your 2026 return, on the normal IRS refund timeline. The calculator estimates the amount attributable to the overtime deduction only, not your total refund.
Need the pay itself first? Use the overtime calculator for a full weekly breakdown, or the overtime pay calculator for biweekly, monthly and annual totals.