No tax on overtime calculator for employers and employees

Only overtime pay that section 7 of the Fair Labor Standards Act requires, and only the part above the regular rate. For time and a half that is the extra half. The base wage for those hours is ordinary pay. Double time, weekend and holiday premiums, and state or contract overtime beyond what the FLSA requires are not qualified overtime.

Up to $12,500 a year, or $25,000 on a joint return, for tax years 2025 through 2028. It is a deduction from taxable income, so the tax saved depends on your bracket. You need a social security number on the return, and a married taxpayer can claim it only by filing jointly.

The deduction drops by $100 for each whole $1,000 that modified adjusted gross income is over $150,000, or $300,000 on a joint return. The IRS form rounds the excess down to the next lower thousand. A single filer with the full $12,500 reaches zero at $275,000, and a joint filer with $25,000 reaches zero at $550,000.

In box 12 with code TT, the total qualified overtime for the employee. The 2025 forms did not change, and the IRS gave employers penalty relief for 2025 for not reporting it separately. For 2025, employees may work out the amount with a reasonable method, such as one-third of time-and-a-half overtime pay shown on a statement.

Yes. The deduction is on the employee's income tax return only. Overtime is still subject to income tax withholding and to the employer and employee share of social security and Medicare tax, and the deduction does not change what payroll withholds.

Only the part the FLSA requires. If your employer pays double time, or a state requires daily overtime, the qualified amount is still the FLSA premium: half the regular rate for each hour over 40 in a workweek. Ask payroll for your FLSA overtime hours and regular rate if the pay stub does not show them.