No Tax on Overtime

How does it work? 

Workers can deduct the “premium” portion of their overtime pay—the extra half in “time-and-a-half”—from their federal taxable income. 

How much can I deduct? 

Individuals can deduct up to $12,500 in overtime pay from federal taxes ($25,000 for married couples filing jointly). 

Who is eligible? 

This middle-class tax cut remains in full for individuals earning up to $150,000 and couples earning up to $300,000. 

Do I have to itemize to claim it? 

No. This is an above-the-line deduction, meaning you can claim it whether or not you itemize your taxes. 

When does this take effect? 

This relief applies to overtime worked in 2025 and beyond. It is retroactive, so workers will receive relief for eligible overtime already worked this year.