Under the No Tax On Overtime provision, eligible taxpayers can deduct the overtime portion of their W2 wages from federal taxable income each year, up to a yearly limit based on filing status.
If your total overtime earnings for the year are less than or equal to your cap, the full amount can qualify for the deduction. If your overtime is greater than your cap, only the amount up to the cap can be deducted from taxable income.
This deduction applies only to the overtime portion of your W2 wages. Regular wages remain fully taxable. Payroll taxes such as Social Security and Medicare still apply to overtime even when the overtime amount is deducted from federal taxable income.
Use this calculator to compare current law to a policy that deducts qualified overtime wages from taxable income up to your annual cap. Enter your W2 totals, select your filing status, and use your estimated effective income tax rate.
Perfect for W2 employees, retirees, and those with investment or rental income.
We help ensure every credit and deduction available to you is identified and applied correctly.
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To educate and empower you, this page includes two calculators that demonstrate how 2025 tax law impacts your take-home pay.
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