Under the new tax law, married couples who choose the Married Filing Separately status are not eligible to claim the "No Tax on Overtime" deduction. This deduction, part of the One Big Beautiful Bill Act (OBBBA), allows eligible workers to reduce their federal income tax liability by excluding a portion of their qualified overtime pay from their taxable income.
The new provision for overtime introduces a deduction for qualified overtime income up to $12,500 for tax years 2025 through 2028 and phases out for income above $300,000 for Married Filing Jointly.
