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Under the One, Big, Beautiful Bill, if you receive qualified overtime compensation, you may deduct the pay that exceeds your regular rate of pay. For 2025, employers aren’t required to report qualified overtime compensation separately on Forms W-2, 1099-NEC, and 1099-MISC.
"No Tax on Overtime" allows workers to deduct up to $12,500 (or, for joint filers, $25,000) of qualified overtime pay on their federal income tax return. The deduction phases out if your modified adjusted gross income (MAGI) exceeds $150,000 and you're a single filer.
What is No Tax on Overtime and how does it work? | Fidelity
The federal overtime provisions are contained in the Fair Labor Standards Act (FLSA). Unless exempt, employees covered by the Act must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay.
Overtime is the amount of time someone works beyond normal working hours. The term is also used for the pay received for this time. Normal hours may be determined in several ways: by agreement between employers and workers or their representatives.
Your employer must pay you at the overtime rate for the extra hours you worked. Use the Department of Labor’s overtime pay calculator to estimate how much overtime pay you may earn.
Learn how the Big Beautiful Bill’s “No Tax on Overtime” law affects your paycheck. See who qualifies, how it works, income limits, and key start dates.