Signed Law 2025–2028 — No Tax on Overtime
No Tax on Overtime Calculator 2026
See how much extra you would keep if overtime pay (the 0.5× premium portion) becomes federal income tax-free.
Annual Tax Savings on Overtime
$4,524
OT Rate
$37.50/hr
Annual OT Pay
$19,500
Fed Tax Saved
$3,033
FICA Saved
$1,492
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Legislative Status
The One Big Beautiful Bill was signed into law in 2025. It allows eligible W-2 employees to deduct up to $12,500 of overtime pay annually from federal taxable income for tax years 2025–2028. The deduction applies to the overtime premium (the extra 0.5× above regular pay). Self-employed and 1099 workers do not qualify.