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Everything on this site is provided for general informational purposes only. It is not tax, legal, accounting, or financial advice, and it is not a substitute for reading the law or speaking with a qualified professional. We are not a tax preparer and we do not file returns.
Our calculators model the OBBBA qualified overtime deduction under IRC §225 for tax years 2025 through 2028. Only the FLSA-required premium qualifies — the "half" in time-and-a-half for hours over 40 in a workweek — not the full overtime wage. The deduction is capped at $12,500 (single / head of household) or $25,000 (married filing jointly), is reduced by $100 for each $1,000 of modified AGI above $150,000 / $300,000, and is not available to married-filing-separately taxpayers. It reduces federal income tax only: Social Security and Medicare are unchanged. It is claimed when you file, not in your paycheck.
For 2025, employers were not required to report qualified overtime separately; use pay stubs or payroll records per IRS Notice 2025-69. From 2026, qualified overtime is reported separately on W-2 Box 12, code "TT", or on 1099-MISC box 14 / 1099-NEC box 1d for non-employee payers. Box 12 reports the total qualified overtime paid during the year, not the amount you may deduct — the statutory cap and MAGI phase-out still apply. For tax years after 2025 the IRS says employees may not claim qualified overtime in excess of the amount reported to them, so a calculator that estimates from hours and pay rates alone can overstate the deduction; our calculators offer an optional W-2 Box 12 code TT field to cap the estimate. If your W-2 is wrong, ask your employer for a corrected W-2c. Source: IRS Fact Sheet FS-2026-13, Q6 / Q10 / Q20 / Q22, verified 2026-11-13. That document is an IRS FAQ, not published in the Internal Revenue Bulletin; the statute and Notice 2025-69 remain controlling. State law, union contracts, shift differentials, bonuses and voluntary premiums above the FLSA minimum do not expand what qualifies.
The federal deduction is taken on Schedule 1-A and reduces federal taxable income, not federal adjusted gross income. A state whose tax calculation starts from federal AGI does not automatically inherit it; that state must adopt the deduction, update its conformity date, or provide its own subtraction. Whether any particular state did so is a question of that state's own law. We have not verified any state's current position against a first-party source and we do not publish a conformity list or assert any state's status.
For that reason our state pages never assert that a particular state conforms or does not conform. They default to the conservative assumption that the state still taxes the overtime you deducted federally, let you switch the assumption, and point you to your state's department of revenue (IRS list of state government websites). We have not verified any state's current conformity position — verify with your state tax agency before you file. Federal basis: IRS Notice 2025-69, verified 2026-11-12.
State rates shown are 2026 top marginal rates as of January 1, 2026, excluding local income taxes, from Tax Foundation's 2026 rate tables (verified 2026-11-12). Top rates apply only to higher incomes, so your own marginal rate is likely lower; that source flags mid-year rate changes. City and county income taxes, where they exist, are not modeled. State overtime statute citations on individual pages were not individually re-verified on 2026-11-12 — verify with your state labor agency. Federal marginal rate choices in the calculators are estimates you select, not a determination of your bracket.
We try to get this right, and we correct mistakes when we find them. But laws, guidance and rate tables change, and no calculator can account for every fact of your situation. Use these figures to orient yourself, then verify with the IRS, your state tax agency, and a qualified tax professional. We accept no liability for decisions made on the basis of an estimate from this site.