No Tax on Overtime: How Much Will I Save? Real Examples
Your tax savings are roughly your deduction × your marginal federal income tax rate. These are illustrations, not tax advice.
| Situation | Qualified OT premium | Deduction | At 12% bracket | At 22% bracket |
|---|---|---|---|---|
| $22/hr, 5 OT hrs/week, 50 weeks | $2,750 | $2,750 | ≈ $330 | ≈ $605 |
| $30/hr, 10 OT hrs/week, 50 weeks | $7,500 | $7,500 | ≈ $900 | ≈ $1,650 |
| $40/hr, 15 OT hrs/week, 50 weeks (single) | $15,000 | $12,500 (cap) | ≈ $1,500 | ≈ $2,750 |
(Premium = half the hourly rate × OT hours.)
Why might my savings be lower?
A deduction can push part of your income into a lower bracket, and credits or a low tax bill can limit the benefit. Your actual result comes from your full return.
Sources
- IRS Fact Sheet FS-2025-03: tax deductions for working Americans
- 26 U.S. Code § 224 – Qualified tips and § 225 – Qualified overtime compensation
- IRS FS-2026-13: overtime deduction Q&A
- Public Law 119-21 (congress.gov)
→ Estimate your deduction with the free calculator
More guides
- 7 Common Mistakes Claiming No Tax on Tips or Overtime
- How to Claim No Tax on Tips and Overtime on Your Return (Schedule 1-A)
- No Tax on Tips: Federal Rules Explained (2025–2028)
- No Tax on Tips & Overtime Phase-Out Explained (MAGI $150,000 / $300,000)
- What Counts as Qualified Overtime for the No Tax on Overtime Deduction
- No Tax on Tips for Self-Employed and Gig Workers
- Does No Tax on Tips Apply to State Taxes?
- Which Jobs Qualify for No Tax on Tips? Eligible Occupations
- W-2 Box 12 Codes TP and TT: Tips and Overtime Reporting