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Level 1
posted Aug 6, 2025 2:35:53 PM

overtime

I am a homemaker. How will the new bill affect me and my family when we file joint returns? We have 1 child under 1 year old.  My husband works  a lot of overtime

0 2 1032
2 Replies
Employee Tax Expert
Aug 6, 2025 2:56:09 PM

The One Big Beautiful Bill introduces a temporary deduction for qualified overtime compensation, for tax years 2025 through 2028. This will allow you to deduct a portion of the premium pay your husband earns for his overtime hours.

 

  • You can deduct up to $25,000 of qualified overtime pay on your joint return.
  • This deduction is available whether you take the standard deduction or itemize.
  • The deduction begins to phase out if your household's modified adjusted gross income exceeds $300,000.

It is important to know that qualified overtime specifically refers to the "half" portion of "time-and-a-half" pay required by the Fair Labor Standards Act.

 

 For example: if your husband earns $40 an hour, his overtime would be paid at $60 an hour.  The extra $20 for each overtime hour would be eligible for the deduction.

 

The bill also makes changes to the Child Tax Credit, which is a significant benefit for families with children.

  • The credit is increased from $2,000 to $2,200 per qualifying child.
  • The income threshold for the credit is made permanent, so it won't be reduced at the end of 2025. It begins to phase out at $400,000 for married couples filing jointly.
  • A portion of the credit is refundable, meaning you could receive a refund even if you don't owe federal income tax.

 

For more details see:

 

Please feel free to reach back out with any additional questions.

 

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Employee Tax & Finance Expert
Aug 6, 2025 3:00:19 PM

The One Big Beautiful Bill will be beneficial to you in the following ways:

  1. Increased Child Tax Credit:  increased from $2,000 to $2,200 for qualified taxpayers
  2. no tax on overtime - deduction of up to $12,500 per taxpayer with phaseout for MAGI over $150,000 (over $300,000 for Married Filing Jointly filers)

Hope that helps @Bpasten90