The short answer
Not exactly. Starting with 2025 returns, you can deduct the extra half of time-and-a-half overtime pay, up to $12,500 a year ($25,000 married filing jointly). Your regular pay for those hours is still taxed, and Social Security and Medicare tax still apply.
Last reviewed: October 2026
An example
You earn $20 an hour and get $30 for overtime hours. The deductible part is the extra $10 an hour, not the full $30.
Who can take it
- Overtime required by federal law (the Fair Labor Standards Act), generally for hours over 40 in a week.
- You have a valid Social Security number.
- If you're married, you file jointly.
Limits
- Up to $12,500, or $25,000 for married filing jointly.
- The limit shrinks once income goes above $150,000 ($300,000 joint).
- You can take it whether or not you itemize.
- It covers 2025 through 2028.
- Overtime paid only because of a union contract or company policy, beyond what federal law requires, may not count.
A 2025 wrinkle
Many 2025 W-2s won't show qualified overtime separately. Keep your pay stubs; they help show the overtime premium.
Official source: IRS: One, Big, Beautiful Bill provisions.
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Disclaimer: This page is general information, not tax advice. Every situation is different, and tax rules change. Reading this page doesn't make you a client.