Under the One Big Beautiful Bill Act (OBBB), which established the federal "No Tax on Overtime" deduction starting in the 2025 tax year, there is a strict eligibility requirement: if you are married,...
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Under the One Big Beautiful Bill Act (OBBB), which established the federal "No Tax on Overtime" deduction starting in the 2025 tax year, there is a strict eligibility requirement: if you are married, you must file a joint return to claim the deduction. To qualify for the overtime deduction, you must meet these requirements: You must be a non-exempt employee who is eligible for overtime under federal law (FLSA). Your filing status cannot be Married Filing Separately. Your modified adjusted gross income must be below $150,000 or less ($300,000 for joint filers) to be eligible for the maximum deduction, If your income is over $150,000 ($300,000 for joint filers), then the deduction begins to reduce by $100 for each $1,000 of MAGI over the applicable threshold amount. Once your MAGI hits $275,000 ($550,000 for joint filers), the overtime deduction is not available. The pay must be for hours worked over 40 in a single workweek, and only the overtime premium (the extra "half" in time-and-a-half pay) is qualified for the deduction. Here is an article you may find helpful: No Tax on Overtime Explained: Qualified Overtime Deduction Rules for 2025