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No Tax on Overtime Calculator (OBBBA 2025–2028)

Enter your hourly rate and overtime hours to see your OBBBA overtime deduction and actual federal tax savings for 2025–2028.

Updated July 2026 · Figures verified July 2026 (sources) · Editorial standards

Federal tax saved (TY2025)
$1,375
OBBBA overtime deduction
$6,250
Deductible premium pay
$6,250
Time-and-a-half pay$18,750FICA still withheld$1,434

Your overtime

$
$

Deducting the $6,250 half-time premium saves you $1,375 of federal tax for TY2025 — only the premium third of your $18,750 time-and-a-half pay qualifies.Overtime is not FICA-free: $1,434 of Social Security and Medicare tax (7.65%) still comes out of your overtime paychecks, and most states still tax the income.

Federal tax saved
$1,375
Published by Hen MachlufVerified against the official sources below Updated July 2026

What is the No Tax on Overtime Calculator?

In short

A worker earning $25/hour with 10 overtime hours a week for 50 weeks deducts $6,250 — the half-time premium portion of $18,750 in time-and-a-half pay — saving about $1,375 of federal tax in the 22% bracket. The deduction caps at $12,500 ($25,000 joint) and phases out above $150,000 MAGI.

This calculator computes your OBBBA overtime deduction for tax years 2025–2028: it isolates the deductible half-time premium from your total time-and-a-half pay, applies the $12,500/$25,000 cap and the $150,000/$300,000 MAGI phase-out, and shows the real federal tax savings at your bracket — plus the 7.65% FICA that still comes out of every overtime dollar.

How to use this calculator

  1. 1Enter your regular hourly rate — not the time-and-a-half rate.
  2. 2Enter average overtime hours per week and how many weeks you work overtime.
  3. 3Enter total income (all wages including overtime) — this drives the phase-out and your tax bracket.
  4. 4Pick your filing status; the cap is $12,500 single / $25,000 married filing jointly.
  5. 5Read the deduction, the federal tax saved, and the FICA that still applies.

The formula

premium=rate×0.5×OT hours
deduction=min(premium,cap)−10%×MAGI excess
tax saved=tax(TI)−tax(TI−deduction)
OT pay = rate × 1.5 × hours. Deductible premium = rate × 0.5 × hours (one-third of OT pay). Deduction = min(premium, cap) − $100 × floor(max(0, MAGI − threshold) ÷ $1,000), not below zero. Tax saved = tax(taxable) − tax(taxable − deduction).
premium
— The extra half-time portion of time-and-a-half — the only part that is deductible
cap
— $12,500 single / $25,000 married filing jointly (per year)
threshold
— $150,000 single / $300,000 joint MAGI — deduction shrinks $100 per $1,000 above it

Worked example

The scenario

gives

The result

Common use cases

  • Hourly workers estimating what the 2025–2028 overtime deduction is actually worth before picking up extra shifts
  • Couples near the $300,000 MAGI line checking how much of the deduction survives the phase-out
  • Payroll and HR teams explaining why overtime paychecks still show FICA withholding

Limitations & assumptions

  • Only the federally required FLSA half-time premium qualifies — double-time, state-only overtime rules, and contractual premiums above 1.5× are not modeled.
  • The phase-out removes $100 for each whole $1,000 of MAGI over the threshold, as Schedule 1-A line 19 does; MAGI is the total income you enter.
  • The bracket estimate assumes the standard deduction; FICA uses the flat 7.65% (the Social Security portion actually stops at the $184,500 wage base (2026)).
  • W-2s report qualified overtime separately starting TY2026 — only separately-reported overtime is deductible.

Official sources

Official publications for rules and figures this page uses. Rates and rules change, so confirm the current figures with the publisher before you rely on them:

Frequently asked questions

No. Only the extra half-time premium of federally required time-and-a-half is deductible — one-third of your overtime pay — capped at $12,500 single / $25,000 joint. If you earn $30/hour on overtime from a $20/hour base, only the $10/hour premium counts, and 7.65% FICA still comes out of all of it.

Disclaimer: KalkWise calculators are provided for general informational and educational purposes only and do not constitute financial, investment, tax, or legal advice. Results are estimates based on the figures you enter and the assumptions described above. Actual outcomes will vary. Consult a qualified professional before making financial decisions.