No Tax on Overtime Calculator
Estimate your tax savings from the new overtime deduction.
The One Big Beautiful Bill Act (OBBBA) created a temporary "no tax on overtime" deduction. It lets you deduct the overtime premium, the extra half-time or full-time pay above your regular rate, from your federal income tax. Enter your overtime and income to estimate the savings once the annual cap and income phase-out are applied.
Only the premium qualifies, not your whole overtime paycheck: at time-and-a-half that's the 0.5× portion above your base rate. The deduction lowers income tax only. Social Security and Medicare are still withheld on every overtime dollar.
Frequently asked questions
Is overtime really tax-free now?
No. The OBBBA deduction lowers the federal income tax on your overtime premium, the pay above your regular rate. Social Security and Medicare (FICA) still apply to every overtime dollar, and the deduction is capped and phases out.
How is the deductible overtime premium calculated?
Only the premium counts. At time-and-a-half you earn 1.5× your rate for overtime hours; the deductible premium is the 0.5× portion above your regular rate. At double-time (2×) the deductible premium is the full 1× above your regular rate.
How does the income phase-out work?
The annual deduction cap is reduced by a fixed amount for every $1,000 (or part of $1,000) your modified adjusted gross income exceeds the threshold for your filing status. Above the ceiling the deduction is $0, and married filing separately can't claim it at all.
How do you estimate the tax saved?
We multiply your deductible premium by your marginal federal income-tax rate (using the 2026 ordinary-income brackets and standard deduction). It's an estimate, so your actual saving depends on your full return.
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Source: OBBBA overtime deduction; IRS overtime guidance; rates year-versioned in our tax data.