Gross overtime compensation
The straight-time value of overtime hours plus every overtime premium actually paid.
Federal overtime deduction
No Tax on Overtime Deduction Calculator
Estimate the federal deduction—not tax-free wages, withholding, a refund or tax saved.
Three clear steps
Set up your deduction estimate
Choose the calculation path that matches the work arrangement.
Three different numbers
Gross pay is not the federal deduction
FLSA-qualified premium
Under the general rule, only the required half-time premium for FLSA hours over 40 is a candidate. Extra state, contract or double-time premium is not automatically qualified.
Federal deduction estimate
The qualified amount after the annual cap, filing-status rules and MAGI phase-out. It is not a refund, withholding change or estimate of tax saved.
Current federal limits
Caps and phase-out
| Filing situation | Annual cap | MAGI threshold |
|---|---|---|
| Eligible non-joint return | $12,500 | $150,000 |
| Married filing jointly | $25,000 combined | $300,000 |
For the 2025 Schedule 1-A method, the reduction is $100 for each complete $1,000 over the threshold. MAGI exactly at the threshold does not reduce the estimate. Married taxpayers must file jointly to use this deduction.
Year-specific reporting
Use the right document for the payment year
Schedule 1-A workflow
Separate reporting was not required for 2025. Use any employer statement and the 2025 Schedule 1-A instructions; if the amount is uncertain, verify it with payroll or a tax professional.
Code TT and 1099 fields
Current IRS material uses W-2 box 12 code TT, 1099-MISC box 14 or 1099-NEC box 1d. Missing or understated reporting may require a corrected form. A timesheet estimate does not replace a corrected reporting form.
Coverage limits
Situations this calculator does not cover
- FLSA coverage, exemption or the applicable §207 method is uncertain.
- The 2026 reported amount is missing, inconsistent or may need correction.
- Filing status, payment year, MAGI or SSN eligibility is not confirmed.
- Overtime came only from a state, contract, weekend or employer policy before 40 hours.
- You need state-tax conformity, return preparation or individualized advice.
Current provenance
IRS FS-2026-13 is the active FAQ source
The August 6, 2026 fact sheet replaced the January FAQ. The 2025 Schedule 1-A and its instructions govern the 2025 workflow; final 2026 Schedule 1-A material still requires a fresh review before anyone relies on a 2026 filing estimate.