How the No Tax on Overtime Calculator Works

Understand how our calculator determines your federal tax savings from the overtime tax deduction.

Quick Overview

Our calculator helps you estimate federal tax savings by calculating the overtime premium portion (50% of regular hourly rate) that you can deduct from your taxes under the One Big Beautiful Bill Act for tax years 2025-2028.

Step-by-Step Calculation Process

1
Input Your Information

Enter your basic employment details:

  • Filing status (Single or Married)
  • Annual gross income
  • Regular hourly rate
  • Average weekly overtime hours
  • Weeks worked per year
2
Calculate Overtime Pay

We calculate your total overtime compensation:

  • Overtime rate = Regular rate × 1.5
  • Annual overtime pay = Overtime rate × Hours × Weeks
  • Premium portion = Regular rate × 0.5 × Hours × Weeks
3
Apply Deduction Limits

Maximum annual deduction limits:

  • Single filers: $12,500
  • Married filing jointly: $25,000
  • Only the premium portion (50%) is deductible
4
Apply Phase-out Rules

Income-based phase-out at $150,000:

  • 10% reduction for every $1,000 over $150,000
  • Complete phase-out varies by filing status
  • Most workers under $150,000 get full deduction
5
Determine Tax Rate

We calculate your marginal tax rate based on income:

  • Uses current federal tax brackets
  • Considers your filing status
  • Applies appropriate marginal rate
6
Calculate Tax Savings

Final calculation:

  • Tax Savings = Final Deduction × Marginal Tax Rate
  • Annual and per-paycheck savings displayed
  • Detailed breakdown provided

Example Calculation

Sample Worker Profile:
  • Filing Status: Single
  • Annual Income: $75,000
  • Hourly Rate: $25.00
  • Weekly Overtime: 8 hours
  • Weeks per Year: 50
  • Marginal Tax Rate: 22%
Calculation Steps:
  1. Overtime Rate: $25.00 × 1.5 = $37.50 per hour
  2. Annual Overtime Pay: $37.50 × 8 hours × 50 weeks = $15,000
  3. Premium Portion: $25.00 × 0.5 × 8 × 50 = $5,000
  4. Maximum Limit Check: $5,000 (within $12,500 limit for single filers)
  5. Phase-out Check: No reduction (income below $150,000)
  6. Final Tax Savings: $5,000 × 22% = $1,100 annually

Calculator Features

Privacy Protected

All calculations performed locally in your browser. No data stored or transmitted.

Mobile Optimized

Works perfectly on all devices - desktop, tablet, and mobile.

Real-time Results

Instant calculations with detailed step-by-step breakdown.

Accurate Estimates

Based on current tax laws and One Big Beautiful Bill Act provisions.

Important Notes
  • This calculator provides estimates for educational purposes only
  • Tax situations vary and depend on many factors
  • Consult with a qualified tax professional for personalized advice
  • Keep detailed records of overtime hours and pay for tax filing

Ready to Calculate Your Tax Savings?

Use our free calculator to estimate your federal tax savings from overtime pay deduction.

Start Calculating