For 2025, the IRS has imposed no requirement on employers to report Qualified Overtime. There is no uniformity in how or whether it is reported.
You may find overtime reported on the last pay...
See more...
For 2025, the IRS has imposed no requirement on employers to report Qualified Overtime. There is no uniformity in how or whether it is reported.
You may find overtime reported on the last paystub for the year of 2025. You may find it in box 7 or box 14 of the W-2. Or it may not be reported at all.
However, many employers will report Qualified Overtime on the W-2. If the Qualified Overtime is reported on your W-2, follow these steps.
At the screen Let's check for other situations, select Overtime. Continue.
At the screen Let's see if your overtime qualifies as tax-free, select either:
Help me calculate my eligible overtime.
No help needed-I know what to enter.
For the Qualified Overtime Deduction:
Maximum annual deduction is $12,500 ($25,000 for joint filers).
Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).
The deduction reduces federal income tax liability, it does not exempt overtime pay from Social Security and Medicare taxes. Employees will still owe these taxes on their overtime earnings.
Taxpayers filing as married filing separately are not eligible for the deduction.
The deduction is available for both itemizing and non-itemizing taxpayers.
See this TurboTax Help.