$
Hours over 40
weeks
In 2026
More options· Single
$
Per year, e.g. a spouse's pay
Tax you save on overtime
$300
A $2,500 deduction: the extra half of your time-and-a-half pay
- Overtime pay
- $7,500
- Premium you can deduct
- $2,500
Federal $300 · California $0. Only the extra half is deductible, not your whole overtime pay.
What this means
Overtime is still taxed when you’re paid. The saving comes as a deduction on your tax return, which lowers the income you’re taxed on by $2,500, so most of it shows up in your refund.
Only the “half” in time-and-a-half counts: on $7,500 of overtime, the deductible part is $2,500.
Your tax with and without the deduction
| Without | With | |
|---|---|---|
| Taxable income | $43,400 | $40,900 |
| Federal income tax | $4,960 | $4,660 |
| California income tax | $1,543 | $1,543 |
| Income tax | $6,503 | $6,203 |
Federal income tax is after credits; a negative figure is money paid to you, such as the earned income credit.
What still applies to your overtime
- The regular-rate part: $5,000 of your overtime pay is taxed as normal. Only the $2,500 premium is deductible.
- Social Security and Medicare: about $574 on your overtime pay. The deduction is for income tax only.
- California income tax: California doesn’t allow the deduction, so your overtime is taxed as usual.
Assumptions in this estimate
- The deduction is for 2026, one of the years 2025 to 2028. It's up to $12,500 a year ($25,000 on a joint return), reduced by $100 for every $1,000 of income over $150,000 ($300,000 for joint returns).
- Only overtime the Fair Labor Standards Act requires counts: time-and-a-half for hours over 40 a week. Extra pay under a state law or a union contract, such as daily overtime or double time, doesn’t.
- You can claim it whether or not you itemize, and you need a Social Security number valid for work. Married people must file jointly.
- From 2026, you can only deduct the overtime premium your employer reports on your W-2 (box 12, code TT). This calculator estimates it from your hours.
- Assumes 52 weeks of regular pay plus the overtime weeks you enter, with the standard deduction.