No Tax on Overtime

Qualified Overtime Deduction 2025 – 2028

Maximum Deduction: $12,500 per tax payer.

Only the ½ time of the overtime is actually exempt. See below example:

Reg Time: 40 hrs at 20.00 = $800

OT hours: 8 hrs at 30.00 =  $240

                                  Total:  $1040

Taxable:

Reg Time: 48 hrs at 20.00 =       $960

Nontaxable OT 8 hrs at 10.00 = $80

Double time pay would be ½ of the double time would be tax exempt.

Employer’s may not have this reported on your W-2 as IRS is not changing the format until 2026. I would highly recommend that if you did have OT paid during 2025 that you take your last check stub with payment details with you when filing your return so that this information can be reported correctly on your tax return and your get the deduction.

We will keep you updated on the changes as the details come out. Stop by and see us in Keysville if you have any questions.