Estimate your federal tax savings from the new OBBBA overtime deduction. Deduct up to $12,500 (single) or $25,000 (MFJ) of qualified OT premium pay from your federal taxable income.
OT premium = total OT earnings ÷ 3. Isolates the “half” of time-and-a-half when hours aren't tracked separately.
Used to check phase-out and estimate bracket.
401k, HSA, student loan interest, etc.
Time-and-a-half means you earn 1.5× your regular rate on overtime hours. The deductible amount is only the extra half — not the base pay. Since 0.5 ÷ 1.5 = ⅓, your OT premium equals exactly one-third of your total OT earnings. This is a recognized estimation method the IRS permits when exact hours aren't separately tracked. If you know your exact hours and regular rate, the hours & rate method above gives you a precise number.
Employers are not required to separately break out qualified OT on 2025 W-2s. This requirement starts in 2026 (Box 12, code TT). For your 2025 return, you self-report using “reasonable methods.” Ask your payroll department. Keep documentation — paystubs, timesheets, or a calculation worksheet like this one.
| Filing Status | Max Deduction | Phase-out Starts | Complete Phase-out |
|---|---|---|---|
| Single / HoH | $12,500 | $150,000 | $275,000 |
| Married Filing Jointly | $25,000 | $300,000 | $550,000 |