No Tax on Overtime Calculator
The federal deduction covers only the premium half of time and a half, up to $12,500 ($25,000 joint) for 2025 to 2028, reduced by $100 per $1,000 of MAGI above $150,000 ($300,000 joint). It saves tax at your bracket but not Social Security or Medicare.
Want the rules explained in plain English? Read the guide: what counts and what you actually keep.
How to use this no tax on overtime calculator
- Choose your filing status. Married taxpayers must file jointly to claim the deduction, and the limits are higher for joint returns.
- Choose the tax year and your filing status, and enter your other income for the year before overtime. The calculator works out your federal income tax from the IRS brackets.
- Enter your regular hourly rate and choose time and a half or double time.
- Enter how many overtime hours you work each week and for how many weeks a year. The calculator turns this into yearly hours.
- Add your state income tax rate if you have one.
- Read your estimated deduction, the federal tax it saves and what you keep from each overtime hour.
What counts as qualified overtime?
Only the premium half of time and a half that the Fair Labor Standards Act (FLSA) requires counts. If you earn $30 an hour, time and a half is $45. The $30 is your normal pay for the hour, and the extra $15 is the premium. That $15 is the part you can deduct. Extra premium above what the FLSA requires, such as the second half of double time, does not qualify. Overtime that is not required by the FLSA, for example some contract or daily overtime, may not qualify either, so check your own situation with the IRS guidance.
How much can I deduct?
- Maximum: $12,500 for single filers, or $25,000 for married couples filing jointly.
- Phase-out: the maximum is reduced by $100 for every $1,000 that your MAGI is above $150,000 (single) or $300,000 (joint).
- Your deduction is the smaller of your qualified overtime premium and the reduced maximum. If your premium is already below the reduced maximum, the phase-out does not cost you anything.
Phase-out of the maximum deduction
| Single MAGI | Maximum (single) | Joint MAGI | Maximum (joint) |
|---|---|---|---|
| $150,000 | $12,500 | $300,000 | $25,000 |
| $175,000 | $10,000 | $325,000 | $22,500 |
| $200,000 | $7,500 | $350,000 | $20,000 |
| $250,000 | $2,500 | $400,000 | $15,000 |
| $275,000 | $0 | $425,000 | $12,500 |
The single maximum reaches zero at $275,000 of MAGI and the joint maximum reaches zero at $550,000.
Why overtime paychecks look taxed more (the withholding myth)
Many people see a big overtime paycheck with a lot taken out and conclude that overtime is taxed at a higher rate. It is not. Your employer withholds income tax as if each paycheck were repeated all year, so an unusually large paycheck is withheld as though you earn a higher annual income. Your real tax is worked out on your return from your whole year's income using the brackets, and any extra withholding comes back as part of your refund. Overtime is taxed at your normal bracket rates, and only the part of your income that falls in a higher bracket is taxed at that higher rate.
How the calculator estimates your federal tax
It adds your overtime to your other income, subtracts the standard deduction (and the overtime deduction), and applies the IRS tax brackets for the year you chose. It does the same without the overtime, and the difference is the federal income tax caused by the overtime. This is why the result is more exact than a flat bracket guess: a few overtime dollars may fall in the 12% bracket and the rest in the 22% bracket. It assumes the standard deduction, no other credits, and that your earnings are below the Social Security wage limit.
Is picking up overtime worth it?
This is the question most people really have. Take-home pay on extra overtime depends on your tax bracket, Social Security and Medicare tax (7.65% for an employee), your state tax and, now, the deduction. The table shows what you keep from each overtime hour at time and a half, with no state income tax, once the deduction is counted.
| Regular rate | Gross per OT hour | Keep at 12% bracket | Keep at 22% bracket | Keep at 24% bracket |
|---|---|---|---|---|
| $18 | $27.00 | $22.77 (84%) | $20.97 (78%) | $20.61 (76%) |
| $22 | $33.00 | $27.84 (84%) | $25.64 (78%) | $25.20 (76%) |
| $28 | $42.00 | $35.43 (84%) | $32.63 (78%) | $32.07 (76%) |
| $35 | $52.50 | $44.28 (84%) | $40.78 (78%) | $40.08 (76%) |
| $45 | $67.50 | $56.94 (84%) | $52.44 (78%) | $51.54 (76%) |
Use the calculator above to add your state tax and your own numbers. Then compare what you keep with what the hours cost you in time, energy, childcare and travel.
Worked examples
Example 1: a typical year. A single worker earns $30 an hour, works 4 hours of overtime a week for 50 weeks (200 hours) and has $60,000 of MAGI in the 22% bracket. Overtime pay is $9,000. The qualified premium is $3,000, so the deduction is $3,000 and it saves $660 of federal income tax. After income tax of $1,980 and Social Security and Medicare of $688.50, the worker keeps about $6,992, which is about $35 for each overtime hour.
Example 2: the cap. A single worker with a $100 rate and 400 overtime hours has a $20,000 premium. At $50,000 of MAGI the deduction is capped at $12,500.
Example 3: the phase-out. The same worker at $200,000 of MAGI has a maximum of $12,500 − $5,000 = $7,500, so the deduction is $7,500.
What can change your result
A raise or a second income that pushes you over the threshold shrinks the maximum. Only the half premium required by federal law counts, so the extra in double time is left out, and so is overtime paid only because of a contract or a state daily rule. Exempt employees have no qualifying overtime. The benefit arrives when you file unless you change your withholding. State income tax is separate, and the calculator assumes your state taxes overtime in full.
Tax brackets and standard deductions checked on 2026-11-11 against IRS Rev. Proc. 2025-32 (tax year 2026) and Rev. Proc. 2024-40 (tax year 2025). Rules checked on 2026-11-11 against IRS guidance: What to know about the No Tax on Overtime deduction and Questions and answers about the new deduction for qualified overtime compensation. This tool gives an estimate and is not tax advice.
No Tax on Overtime Calculator FAQ
Is overtime really tax-free now?
No. Overtime is still subject to income tax withholding and to Social Security and Medicare tax. The new rule is a federal income tax deduction for the premium part of qualified overtime, claimed when you file.
How much is the no tax on overtime deduction?
Up to $12,500 for single filers or $25,000 for married couples filing jointly, for tax years 2025 through 2028, reduced for higher incomes.
What overtime qualifies for the deduction?
Only the premium half of time and a half that the Fair Labor Standards Act requires. The extra premium in double time and other pay above the FLSA requirement does not qualify.
How does the income phase-out work?
The maximum falls by $100 for every $1,000 that your modified adjusted gross income is above $150,000 for single filers or $300,000 for joint filers.
Do I need to itemize to claim it?
No. The IRS says you can claim it whether or not you itemize.
Will I see the benefit in my paycheck?
Not automatically. You claim it on your tax return. You can adjust your withholding with a new Form W-4 if you want some of the benefit during the year.
Do I still pay Social Security and Medicare tax on overtime?
Yes. The deduction applies only to federal income tax.
Is overtime worth it after tax?
It usually is, because you keep a good share of time and a half even after tax, but it depends on your bracket, state and the time it costs you. Use the table and calculator on this page to see what you keep per hour.
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Last updated: November 11, 2026 · How we check this calculator