No Tax on Overtime Calculator 2026
Estimate how much federal income tax you'll save under the new "No Tax on Overtime" deduction — up to $12,500/year ($25,000 married filing jointly) on the premium portion of your time-and-a-half pay.
Your Details
Used to estimate your marginal federal tax bracket and phase-out.
Enter your details and tap Calculate to see your 2026 federal savings.
How the No Tax on Overtime Deduction Works
Public Law 119-21 (the "No Tax on Overtime Act," effective tax years 2025–2028) created an above-the-line federal income tax deduction for the premium portion of FLSA-qualifying overtime — the 0.5× extra in time-and-a-half pay. The first 1.0× portion remains fully taxable.
- Cap: $12,500/year (single, HoH, MFS) or $25,000/year (married filing jointly).
- Phase-out: Begins at $150,000 MAGI (single) / $300,000 (MFJ). Deduction drops $100 per $1,000 over the threshold.
- FICA still applies: 6.2% Social Security and 1.45% Medicare are still withheld on all overtime.
- State taxes vary: Most states (including California) have not conformed; states with no income tax (Texas, Florida, Nevada, Tennessee, etc.) give you the full benefit.
- How to claim: Above-the-line deduction on Form 1040. Employers continue normal withholding; you receive the benefit when you file.
Frequently Asked Questions
When does No Tax on Overtime start?
The No Tax on Overtime federal deduction (Public Law 119-21) is effective for tax years 2025 through 2028. You claim it on your federal Form 1040 starting with your 2025 tax return.
How much can I deduct under No Tax on Overtime?
Up to $12,500 per year for single, head-of-household, and married-filing-separately filers, or $25,000 for married filing jointly. The deduction only covers the premium portion (the 0.5× extra) of FLSA-qualifying time-and-a-half pay, not the full 1.5×.
Does No Tax on Overtime exempt my OT from Social Security and Medicare?
No. FICA (6.2% Social Security and 1.45% Medicare) still applies to all overtime wages. The deduction only reduces federal income tax.
Is there an income limit?
Yes. The deduction begins phasing out at $150,000 modified adjusted gross income (MAGI) for single filers and $300,000 for married filing jointly, reducing $100 of deduction for every $1,000 of income over the threshold.
Related Tools & Guides
Disclaimer: This calculator provides estimates for educational purposes based on 2026 projected federal tax brackets and PL 119-21 as currently enacted. Actual savings depend on your full tax situation, including other deductions, credits, and state taxes. Consult a tax professional for personalized advice.
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