Updated for tax year 2026
OT Calculator
This OT calculator does two jobs at once. First it figures out what your overtime hours are worth under the standard time-and-a-half rule. Then it estimates how much of that overtime qualifies for the new federal overtime tax deduction created by the One Big Beautiful Bill Act, after the annual caps and the income phaseout are applied. Type in your numbers and the results update as you go.
For this estimate, we assume the hourly rate you enter is your FLSA regular rate.
Enter the qualified overtime amount from Box 12, Code TT on your W-2 (reported starting with the 2026 tax year). This is only the premium half of your overtime, not your total overtime pay.
Estimates only, not tax advice. This calculator estimates the federal income-tax benefit of the qualified overtime deduction (claimed on Schedule 1-A). It does not calculate state or local taxes, Social Security, Medicare, or your complete federal tax liability. Married filing separately does not qualify. How we calculate this.
What overtime pay actually is
Under the Fair Labor Standards Act, nonexempt employees earn time-and-a-half for hours worked past 40 in a single workweek. If your regular rate is $20 an hour, your overtime rate is $30 an hour. That $30 is really two pieces: your normal $20 base plus a $10 premium for working the extra hour.
The split matters more than it used to. The OBBBA created a federal income tax deduction (new IRC section 225) for qualified overtime compensation, claimed below-the-line on Schedule 1-A, but only the premium piece counts. In the example above, the deductible portion is $10 an hour, not $30. The deduction runs for tax years 2025 through 2028 and expires on December 31, 2028 unless Congress renews it.
What the calculator needs from you, and why
Every input has a job. Here is what each one does and why the result depends on it:
- Regular hourly rate. Your base rate, not your overtime rate. The calculator multiplies it by 0.5 to isolate the premium portion that qualifies under the law.
- Overtime hours per week. Your typical extra hours beyond 40. More hours means a bigger qualified premium, up to the annual cap.
- Weeks worked per year. Defaults to 52. Lower it if you take unpaid weeks off, since those weeks add no premium.
- Filing status. Sets your annual cap: $12,500 for single or head of household, $25,000 for married filing jointly. It also sets your phaseout threshold. Married filing separately is not listed because it does not qualify at all.
- Modified Adjusted Gross Income (MAGI). Decides whether the phaseout trims your deduction. The reduction starts at $150,000 single or head of household ($300,000 joint), cutting $100 of deduction for every $1,000 of MAGI over the threshold, and the deduction is fully gone at $275,000 single ($550,000 joint).
- Federal marginal tax rate. A deduction saves you money at the rate your last dollar of income is taxed. Pick the federal bracket your income falls into, and the calculator multiplies your final deduction by it to estimate your savings.
A worked example
Take a single filer earning a $30 an hour base rate with 10 overtime hours a week, all year:
- Each overtime hour pays $45, but only the $15 premium qualifies. Ten hours times $15 gives $150 of qualified overtime premium for the week.
- Across 52 weeks, that is 520 hours times $15, or $7,800 a year of qualified premium.
- The $12,500 single cap is not hit, so the full $7,800 stays. With $60,000 of MAGI, well under the $150,000 phaseout threshold, there is no reduction.
- At a 22 percent marginal rate, the estimated federal tax saving is $7,800 times 0.22, which comes to $1,716.
Run the same numbers in the calculator above with your own pay details to see where you land.
What your result means, and its limits
The deduction number is the amount by which the law would lower your federal taxable income. The savings number is what that is worth to you in lower federal income tax at your marginal rate.
Two limits to keep in mind. First, the estimate assumes every overtime hour you enter is overtime required by the Fair Labor Standards Act. State-law-only overtime, voluntary employer premiums, shift differentials, and anything past the 0.5x premium on double time do not count under the law, and the calculator does not separate those out, so your real qualified amount can be lower. Second, nothing here changes your paychecks by itself. Employers keep withholding federal income tax the same way during the year unless you submit an updated Form W-4 accounting for your expected overtime deduction, and the benefit otherwise lands when you file your return.
This page is a planning tool, not tax advice. If your pay situation is complicated, with mixed state and federal overtime rules, union premiums, or income near the phaseout thresholds, confirm your numbers with a tax professional or current IRS guidance.
Frequently asked questions
Why does the OT calculator only count half of my overtime rate?
Because the law only allows the FLSA premium portion. Time-and-a-half is really your regular rate plus a 50% premium, and the OBBBA deduction covers only that premium half. At $30/hour base, your $45 overtime rate contributes $15 per hour to the deduction, not $45.
Why does my filing status change the calculator result?
Filing status sets your annual cap and your phaseout threshold. The cap is $12,500 a year for single and head of household filers and $25,000 for married filing jointly. Married filing separately does not qualify for the deduction at all, so it is not offered in the calculator.
Why does the calculator ask for my MAGI?
Your modified adjusted gross income decides whether the phaseout trims your deduction. It starts at $150,000 single or head of household ($300,000 joint), shaves $100 off the deduction for every $1,000 you are over the threshold, and wipes it out at $275,000 single ($550,000 joint).
Will using this OT calculator change my paychecks?
No — not by itself. Employers keep withholding federal income tax during the year exactly as before unless you submit an updated Form W-4 accounting for your expected overtime deduction. The deduction otherwise lowers your taxable income when you file your return, which can mean a bigger refund or a smaller balance due. Starting with 2026 W-2s, your qualified premium is reported separately in Box 12, Code TT.
Does the savings estimate include Social Security or state taxes?
No, and that is on purpose. The estimate covers federal income tax only, because that is all the deduction touches. FICA (Social Security plus Medicare) still applies to every dollar of overtime pay, and state and local taxes still apply as well.
How exact is the OT calculator result?
It is an estimate for planning, not tax advice. It assumes every overtime hour you enter is overtime required by the Fair Labor Standards Act. State-law-only overtime, voluntary employer premiums, shift differentials, and anything above the 0.5x premium on double time are not modeled, so your real qualified amount can be lower. Confirm with a tax professional or current IRS guidance.
Keep learning
Want the full rulebook behind the numbers? The complete no tax on overtime guide covers who qualifies, what does not count, the 2025 through 2028 timeline, and how to claim the deduction on your return. For a version of the math focused on combined pay and tax planning, try the overtime pay tax calculator.
Last updated: October 2026 · Overtime tax calculator · No tax on overtime guide