"No Tax on Overtime"
Tax Deduction Guide for Overtime Workers
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Single Filers
$12,500
Maximum Deduction
Married Filing Jointly
$25,000
Maximum Deduction
What is Qualified Overtime Compensation?
The Basics
Qualified overtime compensation is the premium portion of your overtime pay that exceeds your regular rate.
- The "and-a-half" portion of time-and-a-half pay
- Must be required under Section 7 of the Fair Labor Standards Act (FLSA)
- Must be reported to the IRS
📘 Example: How It Works
If your regular rate is $20/hour and you earn $30/hour for overtime (time-and-a-half):
✓ Regular portion: $20 (taxable as usual)
✓ Overtime premium: $10 (this qualifies for the deduction!)
Who Can Claim This?
👷 Employees
Workers who receive FLSA-required overtime compensation that is properly reported.
🔧 All Workers
Individuals eligible for overtime under FLSA Section 7 provisions.
📋 Both!
Available to itemizers AND non-itemizers. Everyone can benefit from this deduction.
Income Phase-Out Limits
Deduction begins to phase out at these income levels:
Single Filers
$150K
Joint Filers
$300K
Important Requirements
- Must have valid Social Security Number for employment
- Married taxpayers MUST file jointly to claim
- Overtime must be required under FLSA Section 7
- Overtime compensation must be reported to the IRS