No Tax on Overtime Calculator 2026 β OBBBA OT Deduction Savings
Calculate your tax savings from the OBBBA overtime premium deduction. Enter your hourly wage and overtime hours to see how much you save on federal taxes.
Monthly Overtime Breakdown
| Pay Period | Gross OT Pay | OT Premium (0.5x) | Fed Tax Saved | State Tax Saved | Total Saved |
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How to Use This No-Tax-on-Overtime Calculator
Enter your hourly wage, how many overtime hours you work per week, and the number of weeks you work overtime per year. The calculator computes your annual overtime premium (the deductible 0.5x portion of time-and-a-half) and shows your total federal and state tax savings.
The MAGI phase-out is automatically applied based on your total annual income and filing status. Your total take-home increase combines the direct tax savings from the deduction.
The Formula
OT Premium (deductible) = Hourly Wage Γ 0.5 Γ OT Hours/Week Γ Weeks/Year
Phase-Out Factor = 1 β max(0, (MAGI β threshold) / range)
Deduction = OT Premium Γ Phase-Out Factor
Federal Savings = Deduction Γ Marginal Rate
State Savings = Deduction Γ State Rate
Example
Annual regular wages: $25 Γ 40 Γ 50 = $50,000
Annual OT pay (1.5x): $25 Γ 1.5 Γ 10 Γ 50 = $18,750
Annual OT premium (0.5x): $25 Γ 0.5 Γ 10 Γ 50 = $6,250
MAGI: $50,000 + $18,750 = $68,750 (below $160K β full deduction)
Marginal rate: 22% | Federal savings: $6,250 Γ 22% = $1,375
State savings: $6,250 Γ 5% = $313 | Total savings: $1,688/year
FLSA Eligibility
The OBBBA overtime deduction only applies to workers covered by the Fair Labor Standards Act (FLSA) who are classified as non-exempt. Most hourly production, service, warehouse, retail, and hospitality workers qualify. Salaried workers earning above the DOL salary threshold who are classified as exempt (managers, professionals, administrative staff) do not qualify. Check your classification with your HR department if unsure.
Sunset Provision
The OBBBA overtime deduction is currently scheduled through 2028, after which it may sunset unless Congress acts to renew it. Plan your finances accordingly β the deduction provides substantial savings in the near term but should not be relied upon indefinitely without legislative action.
Overtime Hours Optimizer
See tax savings at 5, 10, 15, 20+ overtime hours per week and find your optimal overtime schedule
See how your tax savings change at different overtime levels. Uses your current hourly wage, filing status, and state rate from the main calculator.
| OT Hours/Week | Annual OT Pay | OT Premium | Deduction | Fed Saved | Total Saved | Effective OT Rate |
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