Skip to main content
HelloBooks.ai home

Overtime Deduction Calculator: Premium Pay on Schedule 1-A | HelloBooks Calculate the qualified overtime deduction from the premium portion of pay, with the $12,500 / $25,000 caps and the MAGI phase-out used on Schedule 1-A.

Calculator · Schedule 1-A, Part III

Overtime deduction calculator

Only the premium part of overtime counts. Enter that amount, the filing status and MAGI, and the calculator runs lines 15 to 21 of Schedule 1-A to give the deductible figure and the phase-out reduction.

See HelloBooks for CPA firmsAll free tools

Free Plan with invoices within 200 transactions, bills & quotes — no credit card.

After the cap
$0
Phase-out threshold (MAGI)
$150,000
MAGI over threshold
$0
Phase-out reduction
$0
Deduction on Schedule 1-A
$0

Estimate only, following the 2025 Schedule 1-A. Confirm eligibility and figures on the return.

How the calculation works

The calculator follows these steps from the IRS form or worksheet, in order.

  1. Start with the qualified overtime premium (the extra half in time-and-a-half), not total overtime pay.
  2. Line 15: the smaller of that amount or $12,500 ($25,000 if married filing jointly).
  3. Lines 17 to 18: subtract $150,000 ($300,000 if married filing jointly) from MAGI.
  4. Line 19: divide by $1,000 and round down to a whole number.
  5. Line 20: multiply by $100. Line 21: subtract from line 15, not below zero.

Source: Schedule 1-A (Form 1040) 2025, Additional Deductions; IRS, tax deductions for working Americans and seniors. Checked on IRS.gov October 21, 2026.

Getting the premium figure right

Pay stubs usually show overtime as hours times one and a half times the rate. For an hour at time-and-a-half, the deductible part is one third of that line: the half-rate premium. Overtime paid at double time under a contract or state rule may need a closer look at what part is qualified.

For 2025 the IRS gave employers penalty relief for not reporting qualified overtime separately, so many clients will not have a clean figure on their W-2. Ask for year-end pay stubs or an employer statement.

Filing status matters twice

The joint cap is double the single cap, and the joint threshold is double too. A married client who files separately gets nothing, which can change the case for filing separately in the first place.

FAQ

Frequently asked questions

Is the whole overtime check deductible?
No. Only the premium portion counts. The regular-rate part of each overtime hour stays taxable as usual.
Do salaried exempt employees qualify?
The deduction covers overtime required under the Fair Labor Standards Act. A salaried employee who is exempt from FLSA overtime and receives a voluntary bonus for extra hours should be checked against the IRS guidance before you claim it.
Related

Keep exploring

No tax on tips calculator

Calculator · Schedule 1-A, Part II

Document request checklist by return type

Checklist · Document requests

Prior-year vs current-year return change checklist

Checklist · Return review

Tax return changes for CPA firms

One page per 2025 and 2026 federal change

Sources

Estimates for tax professionals, not advice on a specific return. Figures and formulas are from IRS.gov on the date shown; confirm against the current form and instructions before filing.

Start automating your books today

Free Plan with full access to the AI accountant — no credit card, no time limit.

See HelloBooks for CPA firmsAll free tools

Subscribe to our newsletter

Stay up to date with the latest news and announcements. No credit card required.

By subscribing, you agree to our Privacy Policy.