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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Terri Lynn
