how does the no tax on overtime work?

illinivol2 · ‎February 6, 2026

MindyB · ‎February 7, 2026

Under the One Big Beautiful Bill Act (OBBBA), the No Tax on Overtime benefit is a federal tax deduction you claim on your 2025 return. When you file, you're allowed to deduct the overtime premium (the extra "half" in your time-and-a-half pay), up to a cap of $12,500 if you're single or $25,000 if you're married filing jointly. There is also an income phaseout (this starts at $150,000 for single filers and $300,000 for married filing jointly).

Here is an article you may find helpful: No Tax on Overtime Explained: Qualified Overtime Deduction Rules for 2025

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MindyB · ‎February 7, 2026

Under the One Big Beautiful Bill Act (OBBBA), the No Tax on Overtime benefit is a federal tax deduction you claim on your 2025 return. When you file, you're allowed to deduct the overtime premium (the extra "half" in your time-and-a-half pay), up to a cap of $12,500 if you're single or $25,000 if you're married filing jointly. There is also an income phaseout (this starts at $150,000 for single filers and $300,000 for married filing jointly).

Here is an article you may find helpful: No Tax on Overtime Explained: Qualified Overtime Deduction Rules for 2025