topic No tax on OT in Get your taxes done using TurboTax

No tax on OT

Mlafond416 — Wed, 05 Nov 2025 17:24:07 GMT

My employer breaks up overtime into different categories in my pay check. For example. I have OT-Pay listed, Detail Pay, and Grant Pay can it can be three separate lines in my check. All three are at a time and a half rate above my normal base pay rate and are earned by working additional hours over my normal scheduled working hours. Will TurboTax know to calculate that?

Re: No tax on OT

VolvoGirl — Wed, 05 Nov 2025 18:25:22 GMT

No tax on Overtime. We don't know yet how it works in Turbo Tax. See https://turbotax.intuit.com/tax-reform

Scroll down to Reduced taxes on overtime. It says…..
Like the new tax provision for tips, 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 $150,000. While this deduction can lower your taxable income, it is not a dollar-for-dollar reduction of your taxes and the actual tax savings will depend on your tax rate.

See IRS Schedule 1-A part III No Tax on Overtime for how it shows on your tax return.
https://www.irs.gov/pub/irs-dft/f1040s1a--dft.pdf

Re: No tax on OT

Opus 17 — Wed, 05 Nov 2025 18:57:08 GMT

Your W-2 box 1 wages reports your total taxable income. The IRS has also announced that they will not be changing the W-2 form for 2025, so your OT will not be reported on your W-2 at all. That means you will report all your taxable income, then you will have to self-report the overtime amount. We don't know what those questions will look like in Turbotax. But Turbotax will never see your pay stub.

The part that is tax-free is only the half-time for working 40 hours or more, not your base pay, and only up to $12,500 per year, and only if your income is less than $150,000.

Meaning that, if you work 60 hours at $20 per hour base pay ($30/hr OT), the tax-free portion would be 20 hours x $10.