Overtime Calculator + No Tax on Overtime
"No tax on overtime" does not make your overtime tax-free. It lets you deduct only the extra half of time-and-a-half, up to $12,500 a year, from federal income tax. Here is what that is worth for your hours.
Questions people ask
How is overtime pay calculated?
Under the federal Fair Labor Standards Act, non-exempt employees earn at least 1.5 times their regular rate for every hour over 40 in a workweek. At $20 an hour, each overtime hour pays $30.
Is overtime now tax-free?
Not entirely. The new federal deduction covers only the extra half of time-and-a-half — the "premium" part — not the whole overtime paycheck. It is capped at $12,500 a year ($25,000 for married filing jointly) for tax years 2025–2028, and Social Security, Medicare and most state taxes still apply.
When do I get the money?
The deduction is claimed on your federal income tax return, so for most workers it shows up as a bigger refund or smaller bill at filing time, not as a larger weekly paycheck — unless you adjust your Form W-4.
Who loses the deduction?
It phases out once modified adjusted gross income passes $150,000 ($300,000 joint). Married people filing separately cannot claim it.
Does double time get a bigger deduction?
No. Only the premium that federal law requires — half your regular rate for hours over 40 — qualifies. Extra pay from a state law or union contract above that is taxed normally.
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