As shown in the screenshot that @DoninGA provided, there is a box to check in the Other Situations follow-up screen in the W-2 section where you can indicate that Overtime applies and then be provide...
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As shown in the screenshot that @DoninGA provided, there is a box to check in the Other Situations follow-up screen in the W-2 section where you can indicate that Overtime applies and then be provided with more entry screens
For the 2025 tax year, your employer might report your qualified overtime compensation for the year in Box 14 of your W-2 form. You could also receive a separate statement reporting your overtime pay for the year (including if you’re self-employed). If that’s the case, you can rely on the reported amount to calculate the overtime deduction.
If your employer doesn’t use Box 14, or a separate statement reporting your overtime pay isn’t provided, you can use other records – such as earnings statements, pay stubs, invoices, or similar documents – to determine the amount of qualified overtime compensation you received in 2025 (keep those records with your other tax documents).
Also remember that you can only deduct the “overtime premium” portion of your total overtime pay – that is, the “half” portion of the “time-and-a-half” overtime pay required by the FLSA. As a result, if the total of all wages for overtime hours – the overtime premium, plus regular wages – is reported on a separate statement, you have to split out the overtime premium yourself.
The phrase “no tax on overtime” is used to describe a new tax deduction for qualified overtime compensation. This overtime deduction was enacted by the “One Big Beautiful Bill” (also known as the Working Families Tax Cut), which was signed into law on July 4, 2025. However, the deduction is temporary – it only applies for the 2025 through 2028 tax years.
Eligible workers can deduct up to $12,500 of overtime pay earned during the year (up to $25,000 for married couples filing a joint return). But if your income is more than a certain amount, the deduction is gradually phased out – potentially to $0.
You can deduct overtime pay on your federal income tax return only if you:
are covered by and not exempt from the Fair Labor Standards Act (FLSA), which is the federal law that requires overtime pay for certain workers
have a Social Security number that’s valid for employment and issued before the due date of your return (including extensions)
don’t use the Married Filing Separately filing status
@Enavmom