Annual Overtime Tax Savings Calculator
Find out how much you keep under the One Big Beautiful Bill Act's No Tax on Overtime provision (P.L. 119-21).
Annual Overtime Compensation
Total overtime pay earned in a year — the extra amount beyond your regular 40-hour wages.
Filing Status
Your federal tax filing status as reported on your IRS Form 1040.
FLSA-Covered Employee
Are you a non-exempt hourly worker eligible for time-and-a-half overtime pay?
Adjusted Gross Income (AGI)
Your total income before deductions, as shown on line 11 of your IRS Form 1040.
Estimates only. Consult a tax professional for accuracy.
Important Notes
- FLSA-covered employees only (hourly workers eligible for time-and-a-half)
- Temporary: Tax years 2025-2028 only
- Income tax savings only — Social Security and Medicare still apply to overtime
- Married Filing Separately filers are not eligible (P.L. 119-21 Sec. 225(d))
- SSN required on tax return
Track Your Overtime Automatically
Stop guessing what you'll take home. Hours44 calculates overtime across multiple jobs and shows your pay after taxes.
Understanding the No Tax on Overtime Law
What P.L. 119-21 Does
Section 70202 of P.L. 119-21 — the "One Big Beautiful Bill" — added a new above-the-line deduction to the Internal Revenue Code (Section 225). Eligible workers can subtract qualifying overtime from their taxable income, which means no federal income tax on that portion of their pay.
Who Qualifies
You need to be FLSA-covered to claim this deduction — in practice, that means non-exempt hourly workers who get time-and-a-half under the Fair Labor Standards Act. Salaried exempt employees don't qualify, no matter how many hours they put in. Neither do independent contractors or the self-employed.
The Deduction Cap and Phase-Out
Single filers can deduct up to $12,500; married filing jointly, up to $25,000. Above $150,000 AGI (single) or $300,000 (MFJ), the deduction shrinks by $100 for every $1,000 you earn over the threshold. At $275,000 (single) or $550,000 (MFJ), the deduction hits zero.
What It Doesn't Cover
This is a federal income tax deduction only. You still owe Social Security (6.2%) and Medicare (1.45%) on all overtime pay. Tips have their own separate deduction under IRC Sec. 224. State taxes are unaffected unless your state passes its own version of the law.
The Sunset
The deduction is temporary — it covers tax years 2025 through 2028. After December 31, 2028, overtime goes back to being fully taxable at the federal level unless Congress votes to extend it.
Frequently Asked Questions
Common questions about the overtime tax deduction
What is the "No Tax on Overtime" law?
Section 70202 of P.L. 119-21 added an above-the-line deduction (IRC Section 225) that lets eligible workers deduct overtime pay from their federal taxable income. If you're FLSA-covered, you won't owe federal income tax on qualifying overtime, subject to annual caps and income phase-outs.
How much can I save on overtime taxes?
It depends on how much overtime you earn, your filing status, and which tax bracket you're in. The cap is $12,500 (single) or $25,000 (married filing jointly). To estimate: multiply your qualifying deduction by your marginal rate. A $10,000 deduction in the 22% bracket, for example, saves $2,200 in federal taxes.
Does this eliminate all taxes on overtime?
No. It only covers federal income tax. You'll still pay Social Security (6.2%) and Medicare (1.45%) on every dollar of overtime. State income taxes aren't affected either, unless your state adopts a matching deduction.
Who is eligible for the overtime tax deduction?
Hourly workers who are non-exempt under the FLSA — the ones who get time-and-a-half for overtime. If you're salaried and classified as exempt, or if you're an independent contractor or self-employed, you can't claim it.
When does the overtime tax deduction expire?
It covers tax years 2025 through 2028. Once 2028 ends, overtime goes back to being fully taxable at the federal level — unless Congress decides to renew it.
What if my income is too high for the full deduction?
The deduction starts shrinking once your AGI passes $150,000 (single) or $300,000 (MFJ). It drops by $100 for every $1,000 over the threshold. By $275,000 (single) or $550,000 (MFJ), the deduction is gone entirely.
What is the One Big Beautiful Bill Act?
It's the common name for Public Law 119-21, which was signed in 2025. Among other things, Title VII created above-the-line deductions for overtime pay, tips, and auto loan interest. This calculator focuses on the overtime deduction from Section 70202.
Need More Than a Quick Calculation?
Hours44 tracks your shifts, calculates overtime automatically, and shows your real take-home pay.