The federal provision covers qualified premium, not all overtime wages. Separate gross pay, calculated premium, reported support, allowed deduction and the resulting tax difference.

Planning arithmetic and payroll reporting

The overtime provision begins with a compensation question: how much of the pay is premium required by the Fair Labor Standards Act? In the standard time-and-a-half arrangement, each overtime hour contains one regular-rate dollar and half a premium dollar. The premium therefore represents one-third of gross overtime pay, not the entire payment. Hours times half the regular rate produces the same result when the entered hours and rate describe that arrangement.

Other arrangements need their own determination. State-only overtime, a contract premium or pay to an exempt worker does not automatically become qualifying FLSA compensation. The calculator asks for that eligibility fact rather than inferring it from the amount. Reported W-2 box 12 code TT is a different entry basis: it already states the qualified premium and must not be divided again. For 2026–2028 filing estimates, reconcile planning arithmetic with separately reported or appropriately corrected compensation. If an employee report is understated or erroneous, obtain the appropriate correction, such as W-2c, rather than treating the calculator as permission to claim an unsupported amount.

The income limit is a staircase

Apply the annual return cap to supported premium first. The cap is $12,500 for single and head-of-household filers, or $25,000 for joint filers. Married filing separately cannot claim the deduction. Next, reduce that capped amount by $100 per complete $1,000 of MAGI above $150,000 or, for joint filers, $300,000. At $150,001 there is no complete block; at $151,000 there is one. A premium below the cap can reach zero before the maximum-cap ceiling.

A deduction is not a credit. With $55,000 wages and $12,000 gross overtime in the stated 2026 single example, the qualified premium is $4,000. Assuming eligibility and a $16,100 standard deduction, taxable income moves from $50,900 to $46,900. Ordinary federal tax moves from $5,910 to $5,380, a $530 saving. The deduction crosses the 22%/12% boundary; applying 22% to every deducted dollar would instead show the misleading $880 figure. The receipt, charts and exports use the actual before-and-after tax calculation.

Scope, future rows and privacy

The tax model covers ordinary federal income with entered eligible adjustments and either the standard or an entered itemized deduction. Standard-deduction mode assumes eligibility, age under 65 and no blindness; an MFS spouse must not itemize. Credits, preferential-rate gains, AMT, NIIT and state taxes are outside the receipt. Employee payroll withholding is incremental on the entered overtime. Social Security uses selected-year wage-base room; employer Additional Medicare withholding begins at $200,000 regardless of filing status, while household liability may differ.

The 2025 and 2026 rows use published policy. The 2027–2028 outlook holds 2026 tax and QBI assumptions constant, including the assumed active-QBI minimum where relevant to the paired tip model; these are planning scenarios, not published future indexed values. The deduction expires after 2028 under current law. No employer upload or identification number is requested. Numeric device saving is optional, and Share begins with a blank link selected. Choosing to include financial values requires review; Copy, CSV and Print contain the displayed receipt. Confirm eligibility and reporting before filing.