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Qualified Overtime Deduction CalculatorUp to $12,500 (IRC 225)

What do these figures come to once the work is shown?

Deduction for the overtime premium after the $12,500 or $25,000 cap and the phase-out above $150,000 or $300,000 of MAGI.

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Your figures
Example figuresIllustrative only. Type over them with your own.
Qualified overtime deduction
$6,000
Applies to taxable years 2025 through 2028
Overtime after the cap
$9,000
Phase-out reduction
$3,000
$100 for each whole $1,000 of MAGI over the threshold
Drawn to one scale
Qualified overtime deduction$6,000
Overtime after the cap$9,000
Phase-out reduction$3,000
All results
MeasureResult
Qualified overtime deduction$6,000
Overtime after the cap$9,000
Phase-out reduction
$100 for each whole $1,000 of MAGI over the threshold
$3,000
How this was worked out
Work shownrecomputed as you type
Capped overtime = lesser of qualified overtime and $12,500 ($25,000 joint)
Reduction = $100 for each whole $1,000 of modified AGI over $150,000 ($300,000 joint)
Deduction = capped overtime - reduction, not below zero

Illustrative arithmetic on the figures you enter. Check the result against your firm's methodology before relying on it.

The formulas

  • Capped overtime = lesser of qualified overtime and $12,500 ($25,000 joint)
  • Reduction = $100 for each whole $1,000 of modified AGI over $150,000 ($300,000 joint)
  • Deduction = capped overtime - reduction, not below zero

How it works

Section 225 allows a deduction for overtime pay required under section 7 of the Fair Labor Standards Act, but only the part above the regular rate. Time-and-a-half pay therefore counts for the half-time premium, not the base wage. The deduction is capped at $12,500, or $25,000 on a joint return, for taxable years beginning after 2024 and before 2029.

The statute phases the deduction out by $100 for each $1,000 of modified AGI over $150,000 ($300,000 joint). The statute says "for each $1,000" without "or portion thereof", and Schedule 1-A drops any part of a $1,000 step, so a partial thousand does not reduce the deduction. Married taxpayers must file jointly, and a Social Security number is required.

Illustrative figures only. Check the result against your firm's methodology before relying on it.

Common questions

Do I enter my total overtime pay?

No. Enter only the amount paid above your regular rate. Section 225(c) counts the excess over the regular rate, not the whole overtime pay.

Are qualified tips counted as overtime?

No. Section 225 excludes any qualified tip from qualified overtime compensation.

When does the deduction end?

No deduction is allowed for taxable years beginning after December 31, 2028.

Sources

Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.

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