IRC §225 · tax years 2025–2028
Overtime deduction calculator
Up to $12,500 of the FLSA-required overtime premium, or $25,000 on a joint return. The premium is the half in time-and-a-half — not your total overtime pay.
Your deduction
$3,080
| Line 14cQualified amount | $3,080 |
|---|---|
| Line 15After the $12,500 cap | $3,080 |
| Line 18Income above $150,000 | $0 |
| Line 19Whole $1,000 steps (rounded down) | 0 |
| Line 20Phase-out reduction | −$0 |
| Line 21Deduction | $3,080 |
This reduces your taxable income, not your income tax bill directly, and it does not reduce Social Security or Medicare tax at all.
A single filer’s overtime deduction is gone entirely at $275,000 of income — not $400,000 like tips, because the smaller cap runs out sooner against the same phase-out.
Only the premium counts, and that surprises everyone
This is the single most misunderstood figure in the whole provision. Qualified overtime is not what you were paid for working extra hours. It is only the premium the Fair Labor Standards Act requires: hours past 40 in a workweek, multiplied by one half of your regular rate.
Work 10 overtime hours at a $30 regular rate and you are paid $450 for those hours — but only $150 is deductible. The deduction covers the “half” in time-and-a-half, never the whole payment.
If your employer pays double time, the extra half above time-and-a-half is generous but not FLSA-required, so it still does not qualify. The figure is derived from your regular rate and your hours, never from what actually landed in your bank account.
Weeks do not average out
Overtime is counted per FLSA workweek. A 50-hour week followed by a 30-hour week gives you 10 hours of overtime, not zero — the short week does not cancel the long one. Add the overtime hours up week by week rather than working from an annual total.
The cap doubles, unlike tips
Schedule 1-A line 15 caps this at $12,500, or $25,000 filing jointly. That genuinely does double for a couple, which is the opposite of the tip deduction, whose $25,000 ceiling is shared. Two provisions, two different rules.
Why it disappears at $275,000
The phase-out threshold is the same as for tips — $150,000, or $300,000 jointly — and it removes $100 per whole $1,000 above it. But because the overtime cap is smaller, it runs out sooner: a single filer’s overtime deduction is gone entirely at $275,000, where the tip deduction survives to $400,000.
At $300,000 of income a single filer loses $15,000 of both. That leaves $10,000 of the tip deduction intact and nothing at all of the overtime one.
Source: IRS Schedule 1-A (Form 1040), Additional Deductions, Part III · last reviewed