Confirm FLSA status first
The calculator asks whether the employee is covered and nonexempt because exempt employees or non-FLSA overtime may not produce qualified overtime compensation for this deduction.
Qualified overtime calculator
Qualified Overtime Calculator
Estimate the FLSA overtime premium portion for the no tax on overtime deduction, then keep the records behind the number.
Not affiliated with the IRS, Treasury, Department of Labor, payroll providers, or tax software vendors. For educational and tracking purposes only.
Calculator workbench
Estimate qualified overtime compensation
Start with your tax year, filing status, FLSA status, pay record method, regular rate of pay, overtime hours, and optional modified adjusted gross income.
What counts as qualified overtime compensation?
Qualified overtime compensation is not every overtime dollar on a paycheck. The starting point is the overtime premium required under FLSA section 7 that exceeds the worker's regular rate of pay.
For typical time-and-a-half overtime, the qualified portion is generally the half-time premium above the regular rate. The regular wages paid for the overtime hours are not the premium portion.
DOL overtime rules focus on covered, nonexempt employees and hours worked over 40 in a workweek. State law, employer policy, contracts, and higher overtime provisions may create extra pay, but this calculator focuses on the federal FLSA premium portion used in IRS qualified overtime guidance.
Separate the overtime premium
The key record is the overtime premium above the regular rate of pay, not just the total overtime pay line.
Keep the record trail
Save pay statements, annual summaries, 2025 W-2 Box 14 notes when provided, 2026 W-2 Box 12 code TT reporting when provided, employer statements, and calculation notes.
How the qualified overtime calculator estimates the amount
Choose the pay record method that matches what you have. If a statement separately reports qualified overtime compensation, use that reported amount. If it shows total time-and-a-half overtime pay, the calculator estimates the half-time premium portion.
If you only have pay stubs, enter the regular rate of pay and overtime hours. The estimate uses the FLSA half-time premium formula and shows warnings when the result needs payroll or tax-professional review.
Reported qualified overtime
Use this when a W-2, 1099, portal, or employer statement identifies qualified overtime compensation separately.
Total overtime pay
Use this when the statement combines regular overtime wages and the overtime premium in one aggregate amount.
Pay stub estimate
Use this when 2025 records do not separately report the amount and you need a documented estimate from rate and hours.
What to check before you claim the deduction
The estimate is not the final tax result. Before you claim the deduction for qualified overtime, review the taxpayer rules and the source records.
- Confirm the tax year is within the 2025 through 2028 deduction window.
- Check filing status. Current IRS overview language says married taxpayers must file jointly to claim the deduction.
- Review modified adjusted gross income because the deduction phases out above the IRS thresholds.
- Confirm Social Security number requirements before relying on the amount.
- Ask a tax professional to review taxpayer-specific eligibility, phase-out, and filing questions.
2025 reporting is different from 2026 and later
For tax year 2025, the IRS has said employers and payers may not separately report qualified overtime compensation on every W-2 or 1099. Some workers may need to calculate a reasonable amount from a Box 14 note, employer statement, payroll portal, or pay stubs.
For tax years 2026 through 2028, employers and other payers are expected to separately report qualified overtime compensation on updated forms. Even then, employees should keep the records that explain the number.
Move from calculator result to a cleaner handoff
Your handoff should show the formula, the pay records, and any W-2 or 1099 notes you used.
Employee tracking sheet
Capture pay period, regular-rate approximation, overtime hours, overtime rate, method, and statement references.
View templatesCPA handoff summary
Summarize the estimated qualified overtime compensation, deduction cap, MAGI warning, source records, and open questions.
Prepare handoffEmployer workflow
Create a consistent process for covered, nonexempt employees and route FLSA, payroll, or tax law edge cases to the right professional.
Employer setupQualified overtime calculator FAQ
Is this qualified overtime calculator an official IRS tool?
No. QualifiedOvertime.com is not affiliated with the Internal Revenue Service, Treasury, or the Department of Labor. It is an educational tracking tool.
Is all overtime pay qualified overtime compensation?
No. IRS guidance focuses on the FLSA overtime premium that exceeds the regular rate of pay. Regular wages paid for overtime hours are not the premium portion.
What if my 2025 W-2 does not separately report qualified overtime?
For 2025, you may need to estimate the amount from employer statements, Box 14 notes, payroll portals, or pay stubs, then keep the method and records for a tax professional.
Can exempt employees use the no tax on overtime deduction?
Exempt employees may not have FLSA overtime compensation for this purpose. Confirm FLSA status and taxpayer-specific facts with payroll, counsel, or a qualified tax professional.
Does state law overtime count?
State law or employer policy can create overtime pay, but this calculator focuses on the federal FLSA premium portion described in IRS qualified overtime guidance.
What records should I keep?
Keep pay stubs, annual payroll summaries, W-2 or 1099 forms, any 2025 Box 14 note, 2026 Box 12 code TT reporting, employer statement, regular rate notes, overtime hours, and the method used.
Official sources
Source baseline checked 2026-07-31
Review the official guidance directly
IRS FAQ: Qualified overtime compensation deduction
Defines qualified overtime compensation, FLSA overtime eligibility, deduction limits, reporting rules, and taxpayer requirements.
View official sourceIRS overview: No Tax on Overtime deduction
Summarizes the deduction cap, MAGI phase-out thresholds, Social Security number rule, and 2025 reporting note.
View official sourceIRS Notice 2025-69
Provides 2025 methods for individuals estimating qualified overtime compensation when separate reporting is not available.
View official source2026 Instructions for Forms W-2 and W-3
Explains 2026 Form W-2 reporting, including Box 12 code TT for qualified overtime compensation.
View official sourceDOL overtime overview
Explains the FLSA overtime baseline for covered, nonexempt employees working over 40 hours in a workweek.
View official source