No tax on overtime calculator
OfficialEnter your rate and overtime hours to see your qualified overtime, the federal deduction and the tax it saves.
From IRS and Social Security Administration From IRS, Social Security Administration and US Government Publishing OfficeChecked
$per hour
hours
hours
Filing status
State
Federal tax saved for the year
$1,280.00
10 overtime hours a week at $25.00 an hour earn $6,500 of overtime premium a year; the deduction of $6,500 saves about $1,280.00 of federal income tax at filing.
- Qualified premium
- $6,500
- the half-time part
- Deduction
- $6,500
- capped at $12,500
- Total overtime pay
- $19,500
Federal tax owed without the deduction$6,900.00
With the deduction$5,620.00
Saved$1,280.00
The deduction lowers the tax owed on the return for 2025 to 2028; paychecks only change if the Form W-4 claims it. Social Security and Medicare still apply to overtime.
How does no tax on overtime work?
It is a federal deduction, not an exemption: from 2025 to 2028, workers can deduct the extra half of their time and a half pay, up to $12,500 a year ($25,000 on a joint return).
How much will no tax on overtime save me?
At $25 an hour with 10 overtime hours a week, the deduction is $6,500 and saves $1,280 in federal income tax for the year.
| Hourly rate | Overtime hours a week | Qualified premium | Deduction | Federal tax saved |
|---|---|---|---|---|
| $20.00 | 5 | $2,600 | $2,600 | $312 |
| $20.00 | 10 | $5,200 | $5,200 | $624 |
| $20.00 | 15 | $7,800 | $7,800 | $936 |
| $25.00 | 5 | $3,250 | $3,250 | $390 |
| $25.00 | 10 | $6,500 | $6,500 | $1,280 |
| $25.00 | 15 | $9,750 | $9,750 | $2,145 |
| $30.00 | 5 | $3,900 | $3,900 | $858 |
| $30.00 | 10 | $7,800 | $7,800 | $1,716 |
| $30.00 | 15 | $11,700 | $11,700 | $2,574 |
| $40.00 | 5 | $5,200 | $5,200 | $1,144 |
| $40.00 | 10 | $10,400 | $10,400 | $2,288 |
| $40.00 | 15 | $15,600 | $12,500 | $2,914 |
| $50.00 | 5 | $6,500 | $6,500 | $1,464 |
| $50.00 | 10 | $13,000 | $12,500 | $3,000 |
| $50.00 | 15 | $19,500 | $11,300 | $2,712 |
How this is calculated
- Federal income tax owed with and without the deduction, for a single filer with no other income.
Who qualifies for no tax on overtime?
Workers paid overtime required by the Fair Labor Standards Act qualify, with a valid Social Security number; married couples must file jointly. The deduction shrinks above $150,000 of income ($300,000 joint).
Salaried workers who are exempt from overtime rules, and overtime paid only under a contract or state law, do not qualify.
What counts as qualified overtime?
Only the extra half of time and a half counts. At $25 an hour with 10 overtime hours a week, that qualified part is $6,500 a year.
Is overtime tax free on my paycheck?
No. Employers still withhold income tax, Social Security and Medicare on overtime. The deduction lowers the tax on your return for 2025 to 2028. You can get the benefit in each paycheck instead by entering the expected deduction in Step 4(b) of Form W-4.
Does my state tax overtime?
The deduction is federal and runs from 2025 to 2028. Arizona, Washington, DC, Idaho, Indiana, Iowa, Michigan and others follow the federal deduction for state tax. Alabama, Colorado, Georgia and New York have a narrower version of it. Arkansas, California, Connecticut, Delaware, Hawaii, Illinois and others tax overtime as regular wages. States without a wage income tax never tax it.
| State | Follows the federal deduction | Note |
|---|---|---|
| Alabama | In part | Alabama did not adopt the federal deductions; it has its own deduction of up to $1,000 of overtime premium pay for 2026 to 2028. Tips stay taxable. |
| Alaska | not stated yet | Alaska has no income tax, so tips and overtime are not taxed by the state. |
| Arizona | Yes | Arizona subtracts the same qualified tips and overtime deducted on the federal return, from 2025 (HB 4168, signed June 13, 2026). |
| Arkansas | No | Arkansas computes income under its own law and does not allow the federal tips and overtime deductions. |
| California | No | California taxes tips and overtime in full; it has not adopted the federal deductions. |
| Colorado | In part | From 2026 Colorado adds back the federal overtime deduction (HB25-1296) but keeps the tips deduction. |
| Connecticut | No | Connecticut starts from federal adjusted gross income, which the federal tips and overtime deductions do not reduce, and has no deduction of its own. |
| Delaware | No | Delaware starts from federal adjusted gross income, which the federal tips and overtime deductions do not reduce, and has no deduction of its own. |
| Washington, DC | Yes | From 2026 the District allows the federal qualified tips, overtime, car loan interest and senior deductions (D.C. Law 26-189). |
| Florida | not stated yet | Florida has no income tax, so tips and overtime are not taxed by the state. |
| Georgia | In part | Georgia does not follow the federal deductions. It has its own smaller ones: up to $1,750 of overtime for full-time hourly workers (2026 to 2028) and up to $1,750 of cash tips. |
| Hawaii | No | Hawaii has its own standard deduction and exemptions and does not allow the federal tips and overtime deductions. |
| Idaho | Yes | Idaho conforms to the Internal Revenue Code as of January 1, 2026 and subtracts the federal Schedule 1-A deductions, including qualified tips and overtime. |
| Illinois | No | Illinois starts from federal adjusted gross income, which the federal tips and overtime deductions do not reduce, and has no deduction of its own. |
| Indiana | Yes | For 2026 only, Indiana subtracts the same qualified tips and overtime deducted on the federal return, for both state and county tax. |
| Iowa | Yes | Iowa starts from federal taxable income and conforms to the federal tax code as it changes, so the tips and overtime deductions carry over. |
| Kansas | No | Kansas starts from federal adjusted gross income and has no deduction for tips or overtime; 2026 bills to add one (SB 277, SB 311) did not pass. |
| Kentucky | No | Kentucky updated its federal conformity date to December 31, 2025 for 2026 (HB 757, signed April 14, 2026) but decoupled from the federal tips, overtime and car loan interest deductions. |
| Louisiana | No | Louisiana starts from federal adjusted gross income and has no deduction for tips or overtime; HB 414, which would have added one, stayed in committee. |
| Maine | No | Maine starts from federal adjusted gross income, which the federal tips and overtime deductions do not reduce, and has no subtraction of its own; the 2026 withholding tables tell employers not to reduce Maine withholding for them. |
| Maryland | No | Maryland starts from federal adjusted gross income and has no subtraction for tips or overtime; 2026 bills to add them (HB 201, HB 1035) did not pass. |
| Massachusetts | No | Massachusetts has no deduction for tips or overtime; both are taxed as wages at 5%. |
| Michigan | Yes | Michigan deducts the same qualified tips and overtime that are deductible on the federal return, for 2026 through 2028 (Public Act 24 of 2025). |
| Minnesota | No | Minnesota starts from federal adjusted gross income and has no subtraction for tips or overtime; 2026 bills to add them did not pass. |
| Mississippi | No | Mississippi has no deduction for tips or overtime; 2026 bills to exclude them (HB 204, HB 1710) did not become law. |
| Missouri | No | Missouri starts from federal adjusted gross income and has no deduction for qualified tips or overtime, so the federal deductions taken after AGI do not lower Missouri tax. |
| Montana | Yes | Montana starts from federal taxable income and adds nothing back for tips or overtime, so the federal deductions also lower Montana tax. |
| Nebraska | No | Nebraska starts from federal adjusted gross income and its adjustments include no subtraction for tips or overtime, so both stay taxable. |
| Nevada | not stated yet | Nevada has no income tax on wages, so tips and overtime are not taxed by the state. |
| New Hampshire | not stated yet | New Hampshire has no income tax on wages, so tips and overtime are not taxed by the state. |
| New Jersey | No | New Jersey taxes tips and overtime as wages; its gross income tax has no deduction like the federal one. |
| New Mexico | No | New Mexico starts from federal adjusted gross income and has no deduction for tips or overtime; HB 264 (2026), which would have added one, was postponed indefinitely. |
| New York | In part | From 2026 New York subtracts up to $25,000 of qualified tips allowed on the federal return, which also lowers New York City and Yonkers tax. Overtime stays fully taxable. |
| North Carolina | No | North Carolina starts from federal adjusted gross income, and the federal tips and overtime deductions are taken after AGI. North Carolina had not adopted its own version as of November 1, 2026. |
| North Dakota | Yes | North Dakota starts from federal taxable income and conforms automatically, so the federal tips and overtime deductions reduce state taxable income. |
| Ohio | No | Ohio starts from federal adjusted gross income (IT 1040 line 1), and the federal tips and overtime deductions come after AGI. The 2025 Ohio return has no deduction of its own for tips or overtime. |
| Oklahoma | No | Oklahoma starts from federal adjusted gross income (Form 511 line 1), and the federal tips and overtime deductions come after AGI. The 2025 Oklahoma return has no deduction of its own for tips or overtime. |
| Oregon | Yes | Oregon allows the same deductions for tips and overtime as the federal return, as subtractions from federal AGI (ORS 316.048; Publication OR-17). |
| Pennsylvania | No | Pennsylvania taxes compensation as defined in its own law, including tips and overtime pay. There is no state deduction for either. |
| Rhode Island | No | Rhode Island starts from federal adjusted gross income, and the federal tips and overtime deductions come after AGI. Rhode Island has not adopted its own version. |
| South Carolina | No | Act 110 starts from federal adjusted gross income and decouples from the federal tips and overtime deductions. |
| South Dakota | not stated yet | Not applicable: the state does not tax wages, so tips and overtime pay are already free of state income tax. |
| Tennessee | not stated yet | Not applicable: the state does not tax wages, so tips and overtime pay are already free of state income tax. |
| Texas | not stated yet | Not applicable: the state does not tax wages, so tips and overtime pay are already free of state income tax. |
| Utah | No | Utah starts from federal adjusted gross income (TC-40 line 4), and the federal tips and overtime deductions come after AGI. Utah counts only the federal senior deduction, in its exemption test. |
| Vermont | No | Vermont starts from federal adjusted gross income, and the federal tips and overtime deductions come after AGI. Vermont has no deduction of its own for them. |
| Virginia | No | Virginia adopts the 2025 federal law only where it changes federal adjusted gross income or itemized deductions. The tips and overtime deductions do neither, so Virginia taxes that pay. |
| Washington | not stated yet | Not applicable: the state does not tax wages, so tips and overtime pay are already free of state income tax. |
| West Virginia | No | West Virginia starts from federal adjusted gross income (IT-140 line 1), and the federal tips and overtime deductions come after AGI. The 2025 West Virginia return has no deduction of its own for them. |
| Wisconsin | No | Wisconsin starts from federal adjusted gross income, and the federal tips and overtime deductions come after AGI. Wisconsin's 2025 subtractions do not include tips or overtime. |
| Wyoming | not stated yet | Not applicable: the state does not tax wages, so tips and overtime pay are already free of state income tax. |
When does no tax on overtime end?
The deduction covers tax years 2025 through 2028. It ends after 2028 unless Congress extends it.