Rules
- Deduct the qualified overtime premium required by the FLSA, up to $12,500 ($25,000 joint), for 2025 through 2028.
- Reduced by $100 per $1,000 of MAGI over $150,000 ($300,000 joint).
- Available whether you itemize or take the standard deduction; you need a valid SSN and must file jointly if married.
FAQ
Is all overtime pay tax-free?
No. Only the premium portion (the extra half) is deductible, and only from federal income tax, not payroll taxes.
Sources (checked Nov 6, 2026): IRS FS-2025-03; P.L. 119-21 sec. 70202.