TEXAS · AS OF AUGUST 2026
No tax on overtime in Texas: as good as it gets.
Texas workers get the cleanest version of this law in America: the full federal deduction on the overtime premium, zero state income tax on any of it, and no state overtime rules muddying what qualifies.
Why Texas is the best-case state.
- ✓No state income tax, constitutionally locked. Article VIII §24-a of the Texas Constitution (Proposition 4, 2019) prohibits an individual income tax outright.
- ✓FLSA governs everything. Texas adds no state overtime requirements, so essentially every non-exempt overtime hour over 40/week is federal overtime, the kind that qualifies.
- ✓No conformity question. There's no state return for the deduction to miss.
What a Texas worker still pays on overtime.
"No tax on overtime" is a nickname, even in Texas:
- •FICA: 7.65% (Social Security + Medicare) still comes out of every overtime dollar.
- •Federal income tax on the base portion: the 1.0× slice of each OT hour is always taxable, only the 0.5× premium is deductible, capped at $12,500 ($25,000 joint) with income limits.
Typical case: an oil-field or warehouse worker at $28/hr with 12 OT hours a week for 48 weeks earns an $8,064 premium, fully deductible below the income thresholds, worth about $1,774 in federal tax at the 22% bracket. Exact numbers for your rate: run the calculator.
Claiming it from Texas.
Same as everywhere: Schedule 1-A with your Form 1040. For 2025, use box 14 or the pay-stub ÷3 method; from 2026, your W-2 box 12 code TT carries the number. There is no Texas return to file.
FAQ.
Is overtime taxed in Texas?
Texas has no state income tax at all: the state constitution prohibits one. Overtime faces only federal income tax and FICA. With the 2025-2028 federal deduction on the premium portion, Texas workers get the best possible treatment in the country.
Does Texas have its own overtime law?
No. The federal FLSA governs overtime in Texas entirely (the Texas Payday Law regulates how wages are paid, not overtime rates). That is good news for the deduction: essentially all Texas non-exempt overtime is FLSA-required, so the 0.5× premium qualifies without the state-law complications California workers face.
Could Texas ever add an income tax on overtime?
It would take a constitutional amendment: two-thirds of both legislative chambers plus a statewide vote. Texas Constitution Art. VIII §24-a (approved by ~74% of voters in 2019) affirmatively prohibits an individual income tax.
Sources: Texas Constitution Art. VIII §24-a; Ballotpedia (Proposition 4, 2019); U.S. DOL FLSA guidance. Educational content, not tax advice. Reviewed August 2026 by the NoTaxOnOvertimeCalc Team.