The deduction is the smaller of your FLSA premium and the statutory cap, then reduced once modified AGI crosses $150,000, or $300,000 if you file jointly. One dollar over a $1,000 step does not reduce it. The next full $1,000 does, by $100.
Deduction = min(premium, cap) − $100 × floor((MAGI − threshold) / $1,000), not below zero.
Social Security and Medicare still apply. This deduction does not reduce them, and the payroll line ignores the wage base.
| FLSA overtime premium | $3,000.00 |
|---|---|
| Deduction after cap and phase-out | $3,000.00 |
| Estimated federal income tax saved | $660.00 |
| Employee payroll tax still due | $688.50 |
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The cap applies before the phase-out. A $20,000 premium on a single return is $12,500 before income limits. Each full $1,000 of MAGI over $150,000 then removes $100. At $275,000 the $12,500 cap is gone. A joint return uses $25,000 and starts at $300,000, gone at $550,000.
Qualified overtime is the extra half in time-and-a-half, not the whole overtime check. Ten hours at $30 is $450 of overtime pay and $150 of qualified premium. If a statement shows $15,000 of total time-and-a-half pay, the premium is $15,000 ÷ 3 = $5,000. Double time does not add a second qualified half.
The deduction is capped at $12,500, or $25,000 on a joint return, for 2025 through 2028. It then drops by $100 for each full $1,000 of modified AGI over $150,000, or over $300,000 on a joint return. Married people who file separately get nothing. A Social Security number is required.
| Full thousands over $150,000 | 10 |
|---|---|
| Phase-out | $1,000 |
| Deduction | $9,000.00 |
| Premium | $3,000.00 |
|---|---|
| Deduction | $3,000.00 |
No. The statute reduces the deduction by $100 for each $1,000 of MAGI over the threshold. This calculator counts only full thousands. $150,999 does not reduce a single filer's deduction. $151,000 reduces it by $100.
No. $25,000 is the cap for the joint return, and the $300,000 MAGI test uses the couple's combined modified AGI. Two working spouses do not each get $25,000.
No. A married person has to file a joint return. The calculator returns a zero deduction for married filing separately and says so in the note.