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No Tax on Overtime Calc

GUIDE · UPDATED AUGUST 2026

How to claim the overtime tax deduction.

Quick answer: file Schedule 1-A with your Form 1040 and put your qualified overtime in Part III. The only real work is finding the right number - and that differs between 2025 and 2026. Here's the whole thing, line by line.

The five steps.

  1. 1

    Confirm you qualify

    You need FLSA-required overtime as a W-2 employee, a valid Social Security number, and a joint return if married. Married filing separately cannot claim it.

  2. 2

    Find your qualified overtime amount

    For 2026 and later: W-2 box 12, code TT, already the premium-only amount, enter it as-is. For 2025: check box 14 or a separate employer statement; if there is none, compute it (total time-and-a-half pay ÷ 3).

  3. 3

    Fill out Schedule 1-A, Part III

    Enter qualified overtime on lines 14a-14c, apply the $12,500/$25,000 cap on lines 15-16, then the MAGI phase-out on lines 17-20, leaving your deduction on line 21.

  4. 4

    Carry it to Form 1040

    Line 21 flows through Schedule 1-A line 38 to Form 1040 line 13b (1040-NR: 13c). You keep the standard deduction, no itemizing needed.

  5. 5

    Optional: update your W-4 to get it per paycheck (2026+)

    The 2026 Form W-4 deductions worksheet includes a line for qualified overtime. Submit an updated W-4 to your employer and your withholding drops during the year instead of waiting for the refund.

Where the number lives on your W-2.

2025 W-2s

Employers weren't required to report it. Look in box 14 or a separate statement. Nothing there? Compute it yourself, total time-and-a-half pay ÷ 3 is IRS-approved (all methods).

2026+ W-2s

Box 12, code TT, mandatory. Per the IRS W-2 instructions, code TT reports "only the 'half' portion of 'time-and-a-half'", it's already the qualified amount. Enter it as-is: don't halve it, don't add your full overtime pay.

Schedule 1-A, Part III, line by line.

Example shown: single filer, $5,000 qualified premium, $165,000 MAGI. Our calculator fills this exact worksheet for your numbers and prints it.

Schedule 1-A Part III line-by-line example
Line What goes there Example
14a Qualified overtime from your W-2(s), code TT (2026+) or your 2025 computation e.g. $5,000
14b Qualified overtime reported on 1099s (rare: FLSA-covered non-employees) usually $0
14c Total qualified overtime (14a + 14b) $5,000
15 Cap: $12,500, or $25,000 on a joint return $12,500
16 Smaller of line 14c or line 15 $5,000
17 Your MAGI (computed in Part I, includes your overtime pay) $165,000
18 MAGI minus $150,000 ($300,000 joint); not below $0 $15,000
19 Line 18 ÷ $1,000, round DOWN to a whole number 15
20 Line 19 × $100 = phase-out reduction $1,500
21 Line 16 − line 20 = your overtime deduction → Form 1040 line 13b $3,500

Note the line 19 instruction, round down ("decrease 1.5 to 1, and decrease 0.05 to 0"). It's the detail sloppy calculators miss, and it always works in your favor.

Common mistakes that cost real money.

FAQ.

Do I need to wait for my employer's number?

For 2026 returns, the W-2 box 12 code TT amount is the standard source. For 2025, you don't need anything from your employer, the IRS explicitly allows computing it yourself from pay stubs using any reasonable method.

What if the amount on my W-2 looks wrong?

Ask your employer for a correction first (Form W-2c exists for this). Keep the pay stubs that support your own math. IRS guidance on correcting over- or under-reported code TT amounts is still developing, so document everything.

Do I need to itemize deductions to claim it?

No. The overtime deduction is available with the standard deduction. It stacks on top.

Will tax software handle this automatically?

Major tax software is expected to handle Schedule 1-A from the 2025 filing season on; check your product's forms list. You still need to supply the qualified overtime amount if your W-2 doesn't show it, which is common for 2025.

Get your Schedule 1-A numbers.

The calculator fills the worksheet and prints it.

Open the calculator

Sources

Educational content, not tax advice. Reviewed against primary sources August 2026 by the NoTaxOnOvertimeCalc Team.