How overtime deduction will affect my adjusted income for IRA contribution?

[ir63]

Will overtime deduction reduce my adjusted gross income or only my taxable income? For example, our adjusted gross income $136000 (married, filed joint return) and my qualified overtime is $5000. What will be our IRA contribution limit? With $136K it will be $3500 for each and with $131K ($136K minus $5K overtime) would be $5250 for each

[Bsch4477]

Each of you can contribute $7000 ($8000 if age50 or older). The overtime deduction is subtracted from AGI and so doesn’t affect your contribution limit. 

[NCperson]

@ir63 the deduction for qualified overtime does not change the calculation for IRA contributions.  

Since you income exceeds the $126,000, your IRA contribution is limited, but that limit is not affected by the overtime deduction.  The overtime deduction only affects how much of your income is subject to tax.