It's important to check with your employer to see if your overtime qualifies for the deduction. For 2025, the employer is not required to make an entry on the W-2 since it was a new deduction. See the information below for assistance with your entry and qualifying overtime pay.
In TurboTax Online, this is how you enter the qualified overtime premium:
- After entering your form W-2, you'll see a screen titled Let's Check for Other Situations
- Put a checkmark on Overtime and click Continue
- Follow the TurboTax questionnaire to enter your qualified overtime premium
- This deduction will transfer to Schedule 1-A of your form 1040, then to line 13b of your form 1040.
The overtime description is as follows under the One Big Beautiful Bill Act (OBBBA): 'For tax years 2025 through 2028, individuals who receive qualified overtime compensation may deduct the pay that exceeds their regular rate of pay (generally, the “half” portion of “time-and-a-half” compensation) that is required by the Fair Labor Standards Act and reported on a Form W-2, Form 1099, or other specified statement furnished to the individual.' (Tips Received in 2025)
Your employer must meet specific Fair Labor Standards Act (FLSA) requirements to qualify. If your employer doesn't meet these qualifications, then you do not have qualifying overtime.
When the Fair Labor Standards Act was enacted in 1938, it provided an exemption from the overtime requirements for bona fide executive, administrative, and professional employees. It is possible that your employer pays this employee benefit but is not required to make the payment under the FSLA.
For tax year 2026, a specific Box 12 code will be used. This amount is an above-the-line deduction, meaning it will be subtracted from your gross income on form 1040.
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