Schedule 1-A · Tax year 2026

Overtime Deduction Calculator: Estimate the Premium Deduction for 2026

For tax year 2026 there is a deduction for the overtime premium: the extra half in time-and-a-half that the Fair Labor Standards Act requires. The limit is $12,500 of premium, or $25,000 on a joint return. Enter your regular rate and the overtime hours the Act required, and the calculator estimates the deduction from the premium alone.

Last reviewed: November 3, 2026.

The overtime premium calculator

Filing status Your regular hourly rate (dollars per hour) Overtime hours in 2026 that the Fair Labor Standards Act required (hours)

Count only the hours the federal Act required your employer to pay at time-and-a-half, generally hours over 40 in a week. Leave out overtime paid only because of state law, a contract, or company policy.

Amount in Box 12 of your W-2 with code TT (optional, dollars)

For 2026 the deduction is generally limited to the amount the employer separately reported with code TT. If you enter it and it is lower, the estimate uses it.

Modified adjusted gross income estimate (dollars)

For most filers this is the same as adjusted gross income. It is used only to check the phaseout below.

Estimate only. This tool gives a general estimate based on the figures you entered and the published IRS rules cited on this page. It is not tax advice, it is not a tax return, and it cannot be relied on to avoid any tax penalty. Tax law and IRS guidance change. Confirm your figures against the current IRS instructions for the form you file, or ask a qualified tax professional.

Nothing you enter is sent anywhere. The calculation runs in your browser.

Only the premium counts

The deduction is not for your overtime pay. It is for the premium only: the extra half that time-and-a-half adds on top of your regular rate. If your regular rate is $20 an hour, an overtime hour pays $30, and the premium in that hour is $10. Ten overtime hours at that rate hold a $100 premium, not $300 of deduction material.

The hours must be hours the Fair Labor Standards Act required to be paid at the premium rate. Overtime that an employer pays because of state law, a union contract, or its own policy, where the federal Act does not require it, does not count toward this deduction, even if it was paid at time-and-a-half.

The rules, in one table

The overtime premium deduction, tax year 2026
Maximum	$12,500 of premium, or $25,000 on a joint return
What counts	The extra half in time-and-a-half, for hours the Fair Labor Standards Act required
What does not count	The full overtime rate, and premium paid only under state law, a contract, or employer policy
2026 reporting rule	The deduction is generally limited to the premium your employer separately reported in Box 12 code TT. This rule is stated in IRS Fact Sheet FS-2026-13
Phaseout	Begins at $150,000 of modified AGI, or $300,000 on a joint return
Payroll tax	Unchanged. This deduction reduces income tax only; Social Security and Medicare tax still apply to the same pay in full
Years	Tax years 2025 through 2028

A note on the level of the guidance

There are no final regulations for this deduction. The rules on this page rest on the enacted law, Public Law 119-21, and on IRS Fact Sheet FS-2026-13 (August 6, 2026). A fact sheet is IRS guidance, not binding legal authority, and the final Schedule 1-A and its instructions are still to come. This page will be rechecked the day they publish.

If the code TT amount on your W-2 and your own pay stub math disagree, the overtime premium checker compares the two figures and states the difference. The deduction itself sits on the Schedule 1-A page, with the other three new deductions.

Sources

Public Law 119-21, enacted July 4, 2025. Created this deduction, its $12,500 and $25,000 limits, and its phaseout.
IRS, Fact Sheet FS-2026-13, August 6, 2026. States the 2026 reporting rule limiting the deduction to the amount the employer separately reported. Source level: guidance, not binding legal authority.
IRS, Instructions for Forms W-2 and W-3, tax year 2026. Final version, posted January 30, 2026. Carries Box 12 code TT.
IRS, Fact Sheet FS-2026-04, and Treasury claimant figures reported in Deloitte Tax News and Views, June 5, 2026. More than 29 million filers claimed this deduction for 2025, with an average claim over $3,100.

Last reviewed: November 3, 2026.