Overtime Tax Savings Calculator: How Much Will You Get Back?
How Much Will You Save with No Tax on Overtime?
Looking for an overtime tax refund calculator to estimate your savings under the new federal overtime deduction? The no tax on overtime provision (IRC §225, P.L. 119-21) lets eligible W-2 workers deduct the 0.5x overtime premium from their federal taxable income. Most eligible workers save between $200 and $2,750+ per year in federal income tax, depending on hourly rate, overtime hours worked, tax bracket, and MAGI.
Below you will find pre-built savings tables covering 13 verified scenarios across every relevant tax bracket, from minimum-wage earners to high-income filers hitting the phaseout. Each number has been calculated using bracket-spanning methodology: tax(taxable income) minus tax(taxable income minus deduction).
For your personalized estimate based on your exact wage, hours, and filing status, use the overtime tax calculator.
Overtime Tax Savings: Single Filer Scenarios
All scenarios use 2025 federal tax brackets, standard deduction of $15,750, and the rule that only the 0.5x overtime premium is deductible (IRS Notice 2025-69). The annual cap is $12,500 for single and head of household filers. Savings are computed as the difference in federal income tax with and without the deduction.
| Hourly Rate | OT hrs/wk | Weeks | MAGI | Deduction | Notes | Est. Tax Savings |
|---|---|---|---|---|---|---|
| $15 | 5 | 48 | $40,000 | $1,800 | — | $216 |
| $18 | 8 | 50 | $50,000 | $3,600 | — | $432 |
| $25 | 10 | 50 | $80,000 | $6,250 | — | $1,375 |
| $30 | 15 | 50 | $90,000 | $11,250 | — | $2,475 |
| $50 | 20 | 50 | $80,000 | $12,500 | Cap: $12,500 | $2,750 |
| $40 | 10 | 50 | $120,000 | $10,000 | Spans 22%/24% | $2,218 |
| $100 | 10 | 50 | $120,000 | $12,500 | Cap + spans 22%/24% | $2,768 |
| $25 | 10 | 50 | $200,000 | $1,250 | Phased out | $300 |
| $50 | 15 | 50 | $225,000 | $5,000 | Cap + phased out | $1,600 |
When a deduction spans two brackets (e.g., the $40/hr and $100/hr scenarios above), savings are computed progressively — the portion in the higher bracket saves more per dollar than the portion in the lower bracket. The overtime tax calculator handles this automatically.
Overtime Tax Savings: Married Filing Jointly Scenarios
MFJ filers use wider tax brackets and a $31,500 standard deduction. The overtime deduction cap for MFJ is $25,000 per return, not per spouse — if both spouses earn qualifying overtime, their combined deduction cannot exceed $25,000 (IRS FAQ A5). The phaseout threshold is $300,000 MAGI. Married filing separately is not eligible.
| Hourly Rate | OT hrs/wk | Weeks | MAGI | Deduction | Notes | Est. Tax Savings |
|---|---|---|---|---|---|---|
| $25 | 10 | 50 | $100,000 | $6,250 | — | $750 |
| $25 | 10 | 50 | $250,000 | $6,250 | — | $1,500 |
| $40 | 15 | 50 | $250,000 | $15,000 | Spans 22%/24% | $3,536 |
| $25 | 10 | 50 | $350,000 | $1,250 | Phased out | $300 |
How Is the Overtime Tax Savings Calculated?
The savings calculation follows three steps:
- Calculate the overtime premium. Multiply your hourly rate by 0.5, then by your weekly overtime hours and number of weeks worked. Only the 0.5x premium is deductible — not the full 1.5x overtime pay. If you earn $25/hr and work 10 OT hours per week for 50 weeks: $25 × 0.5 × 10 × 50 = $6,250. (IRS Notice 2025-69)
- Apply the cap and phaseout. The annual cap is $12,500 for single/HoH and $25,000 for MFJ. If your MAGI exceeds $150,000 (single/HoH) or $300,000 (MFJ), the cap reduces by $100 for every complete $1,000 over the threshold. (Schedule 1-A, lines 11–12)
- Compute your tax savings. Calculate federal income tax on your taxable income, then recalculate with the deduction subtracted. The difference is your savings. When the deduction spans two tax brackets, the portion in each bracket saves at that bracket’s rate.
For the full methodology behind these numbers, see the calculation methodology. For a detailed breakdown of the phaseout formula with worked examples, see the income limits and phaseout chart.
What Affects Your Overtime Tax Savings?
Three factors drive the size of your savings:
- Your tax bracket. A worker in the 22% bracket saves nearly double per deducted dollar compared to someone in the 12% bracket. The tables above show this clearly: a $6,250 deduction saves $750 at 12% (MFJ $100K) but $1,375 at 22% (Single $80K).
- Overtime hours and hourly rate. More overtime hours and a higher hourly rate produce a larger 0.5x premium. But the deduction is capped at $12,500 (single/HoH) or $25,000 (MFJ), so there is a ceiling on how much premium you can deduct.
- MAGI and the phaseout. Once MAGI exceeds $150,000 (single/HoH) or $300,000 (MFJ), the cap shrinks by $100 per $1,000 over the threshold. A single filer at $200K loses $5,000 of cap. At $275K/$550K, the deduction is fully eliminated.
For the complete set of rules, caps, and phaseout thresholds, see no tax on overtime rules and limits. To check whether you meet the four eligibility requirements before calculating savings, use the eligibility checker.
Frequently Asked Questions
How much will I get back from no tax on overtime?
Most eligible workers save $200–$2,750+ per year in federal income tax. Your savings depend on your hourly rate, overtime hours, tax bracket, and MAGI. A worker at $25/hr with 10 OT hrs/wk saves approximately $1,375 at the 22% bracket. Use the overtime tax calculator for your personalized estimate.
Does the overtime deduction affect my refund?
Yes, indirectly. The deduction reduces federal taxable income, not withholding. If taxes were withheld on your full income all year, the reduced taxable income at filing means you owe less, increasing your refund. It is not a direct refund or credit.
How is the overtime tax deduction calculated?
Three steps: (1) Calculate the 0.5x premium — hourly rate × 0.5 × OT hours × weeks. (2) Apply the $12,500 cap (single/HoH) or $25,000 (MFJ), then reduce by $100 per $1,000 of MAGI over $150K/$300K. (3) The final deduction reduces taxable income, saving tax at your marginal rate. Claimed on Schedule 1-A, Part III. (IRS Notice 2025-69)
What is the maximum overtime tax savings?
Maximum deduction: $12,500 for single/HoH, $25,000 for MFJ. At the 22% bracket, maximum single-filer savings = $2,750. At 32%, maximum = $4,000. Actual savings depend on your bracket and whether the deduction spans two brackets.
Does FICA apply to overtime even with the deduction?
Yes. The deduction only reduces federal income tax. Social Security (6.2%) and Medicare (1.45%), totaling 7.65%, still apply to all overtime pay including the premium. (IRS FAQ)
Can both spouses claim the overtime deduction?
Both spouses can earn qualifying overtime, but the $25,000 MFJ cap is per return, not per spouse. Their combined deduction cannot exceed $25,000. You must file jointly — married filing separately (MFS) is not eligible. (IRS FAQ A5)
What if my income is above the phaseout threshold?
If MAGI exceeds $150K (single/HoH) or $300K (MFJ), the cap reduces by $100 per complete $1,000 over the threshold. Example: a single filer at $200K loses $5,000 of cap — maximum deduction becomes $7,500. The deduction is fully eliminated at $275K (single/HoH) or $550K (MFJ). See the full phaseout chart.
When will I see the savings — do I need to wait until I file?
You claim the deduction on Schedule 1-A when filing your federal return. There is no reduced withholding during the year unless you adjust your W-4. Savings appear as a larger refund (or smaller balance due) at filing. For tax year 2025, the deduction is claimed when filing in early 2026.