No Tax on Overtime Calculator
Calculate your potential tax savings under the "One Big Beautiful Bill Act" for tax years 2025-2028. This calculator implements the official federal overtime tax deduction based on H.R.1, Section 70202.
Your tax filing status determines deduction limits and phase-out thresholds
Your total annual income before taxes. Must be under $160,000 to qualify.
Your regular hourly wage rate (not including overtime premium)
Hours worked beyond 40 hours per week on average
Number of weeks you work overtime per year (typically 50-52)
Click 'Calculate Tax Savings' to see your results
Overtime Premium Calculation
Only the 50% overtime premium (not the full overtime pay) is eligible for the deduction
Apply Deduction Limits
Maximum deduction: $12,500 (single) or $25,000 (married filing jointly)
Income Phase-out
Deduction phases out for higher incomes: $150K/$300K thresholds
Important Disclaimer
This calculator provides estimates based on the "One Big Beautiful Bill Act" (H.R.1, Section 70202) for tax years 2025-2028. Actual tax savings may vary based on individual circumstances, changes in tax law, and IRS implementation guidance. This tool is for educational purposes only and should not be considered professional tax advice. Consult with a qualified tax professional for personalized guidance. The deduction only applies to federal income tax - FICA taxes (Social Security and Medicare) still apply to all overtime pay.
Calculate How Much You Could Save With the New Federal Overtime Tax Deduction Using Our No Tax on Overtime Calculator
With the new act now law, the U.S. federal tax code has changed significantly for the 2025-2028 tax years. For the first time, working Americans can deduct a portion of their overtime pay from their taxable income using tools like our no tax on overtime calculator.
Our no tax on overtime calculator cuts through the legislative complexity. By entering a few key details into the no tax on overtime calculator, you can get a clear, reliable estimate of your potential tax savings.
Use our no tax on overtime calculator to see your personalized results:
- Your estimated total annual overtime earnings.
- The maximum amount you can deduct under the new law's specific rules.
- Your potential savings on your 2025 federal income tax bill using the no tax on overtime calculator.
How Our No Tax on Overtime Calculator Works: 3 Simple Steps, Completely Confidential
- Enter Pay Details: Provide your regular hourly rate, average overtime hours per week, pay frequency (weekly, bi-weekly, etc.), and your federal tax filing status in our no tax on overtime calculator.
- Provide Annual Income: For an accurate calculation that includes the new income limitations, please enter your estimated Modified Adjusted Gross Income (MAGI) for the year into the no tax on overtime calculator.
- Get Your Detailed Estimate: Instantly see your personalized savings breakdown from the no tax on overtime calculator. We never store or share your data.
Deep Dive: Understanding the New Overtime Tax Law and How Our No Tax on Overtime Calculator Handles It
This new tax benefit is part of Section 70202 of the "One Big Beautiful Bill Act." To accurately understand its impact and how our no tax on overtime calculator processes it, it's crucial to know the details:
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It's an "Above-the-Line Deduction," Not a Full Exemption This is the most critical point that our no tax on overtime calculator takes into account. You are not exempt from paying taxes on overtime. Instead, you deduct a portion of your overtime earnings from your gross income. This lowers your "Taxable Income," and your final tax bill is calculated on this lower amount, which our no tax on overtime calculator demonstrates clearly.
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Only the "Premium Portion" of Qualified Overtime is Deductible The deduction doesn't apply to your entire overtime paycheck, which our no tax on overtime calculator properly accounts for. It only applies to the "premium portion" of overtime pay mandated by the federal Fair Labor Standards Act (FLSA).
- Example: If your regular hourly rate is $20, your FLSA-mandated overtime rate is $30 per hour (1.5x). This $30 is made up of your $20 regular pay + a $10 "overtime premium." Only that $10 premium part is eligible for the deduction. Our no tax on overtime calculator figures this out for you automatically.
- Important: Overtime paid based on state laws (like California's daily overtime rules) or specific company policies does not qualify for this federal deduction, which our no tax on overtime calculator takes into consideration.
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It Has Annual Deduction Caps The benefit is limited, which our no tax on overtime calculator factors in automatically. The maximum annual deduction is capped at $12,500 for individual filers and $25,000 for married couples filing jointly.
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It Phases Out for Higher Earners The law includes income limitations to target middle-income workers, and our no tax on overtime calculator handles these complex calculations. The ability to take the deduction is reduced if your Modified Adjusted Gross Income (MAGI) exceeds certain thresholds.
- Thresholds: The phase-out begins at $150,000 for individuals and $300,000 for married couples filing jointly.
- Reduction Rule: For every $1,000 of income you earn above the threshold, your maximum deduction is reduced by $100. This complex calculation is built into our no tax on overtime calculator.
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It's Temporary This provision is currently set to be in effect for the 2025, 2026, 2027, and 2028 tax years.
Disclaimer:
This no tax on overtime calculator is intended for informational and estimation purposes only and should not be considered legal or financial advice. All calculations from our no tax on overtime calculator are estimates based on the information you provide, our interpretation of the "One Big Beautiful Bill Act," and the 2025 IRS tax regulations. Tax laws are complex and subject to change. For advice tailored to your specific financial situation, please consult with a qualified tax professional.
Ready to See Your Real-World Numbers with Our No Tax on Overtime Calculator?
Don't guess how the new tax law will affect your paycheck. Use our free, detailed no tax on overtime calculator to get your personalized estimate now. Our no tax on overtime calculator provides instant, accurate results based on your specific situation.
Frequently Asked Questions
Get answers to common questions about the No Tax on Overtime deduction, eligibility requirements, and how our calculator works.
Is this overtime tax deduction really a law?
Yes. The provision is part of the "One Big Beautiful Bill Act" (H.R.1, Section 70202), which was passed by Congress and signed into law on July 4, 2025. It is effective for the 2025-2028 tax years.
Does this mean ALL taxes on my overtime are gone?
No. This is a common misconception. The law creates a deduction that lowers your federal income tax only. You will still pay your full share of FICA taxes (Social Security and Medicare) and any applicable state and local income taxes on all of your overtime earnings.
Who is most likely to benefit from this new law?
The primary beneficiaries are middle-income hourly workers who frequently work overtime that is mandated by the federal FLSA. Due to the income and deduction caps, the financial impact will be less significant for very high-income earners or those who work very little overtime.
Can you explain the "overtime premium" calculation?
Under federal law, your overtime pay rate is 1.5 times your regular rate. If you make $20/hour, your overtime rate is $30. The law considers this $30 to be your $20 base pay plus a $10 "premium." Only the premium portion—the extra amount you earn for working overtime—is deductible.
Is this calculator an official tool from the IRS?
No. This calculator is an independent estimation tool. It is not created or endorsed by the Internal Revenue Service (IRS) or any other government agency. Our calculator is designed to provide helpful, educational estimates based on the new law.
What are the income limits and phase-out rules?
The deduction phases out for higher earners. The phase-out begins at $150,000 for individuals and $300,000 for married couples filing jointly. For every $1,000 of income above the threshold, your maximum deduction is reduced by $100. Workers earning over $160,000 are completely ineligible.
What's the maximum I can deduct each year?
The maximum annual deduction is capped at $12,500 for individual filers and $25,000 for married couples filing jointly. Remember, this applies only to the premium portion (50%) of your overtime pay, not the full overtime amount.
How long will this deduction be available?
This is a temporary provision set to be in effect for the 2025, 2026, 2027, and 2028 tax years only. After 2028, the deduction will expire unless Congress extends or makes it permanent.