Income tax relief and deductions: No tax on overtime

Written By Dawn Priebe

Effective for 2025 through 2028, individuals who receive qualified overtime compensation may deduct the pay that exceeds their regular rate of pay (such as the “half” portion of “time-and-a-half” compensation) that is required by the Fair Labor Standards Act (FLSA) and reported on a Form W-2, Form 1099, or other specified statement furnished to the individual.

  • Maximum annual deduction is $12,500 ($25,000 for joint filers).

  • Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).

Dawn Priebe
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