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  • OBBBA Overtime Deduction
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    • OBBBA Overtime Deduction

    Key Details About OBBBA Overtime Deduction:
    • Duration: The provision is temporary, running from tax years 2025 through 2028.
    • Limitations: The maximum annual deduction is 
       for individuals, 
       for married filing jointly.
    • Income Phase-out: The deduction begins to phase out for taxpayers with a Modified Adjusted Gross Income (MAGI) over 
       (
       for joint filers).
    • Not Tax-Free Entirely: While called "no tax on overtime," this applies to federal income tax. Overtime remains subject to FICA (Social Security/Medicare) and likely state/local taxes.
    • What Qualifies: Only the "premium" portion—the extra 0.5 times the regular rate—is deductible. For example, if you earn 
      /hr, your 
      /hr overtime rate consists of 
       regular pay and a 
       premium; only the 
       is deductible.
    • Eligibility:
       Generally applies to hourly and non-exempt employees covered by the 
      Fair Labor Standards Act (FLSA)
      .
    J. David Campbell EA | 03/04/2026



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