My employer just gave me a W-2, but apparently they are not planning on providing documentation about overtime worked. I thought walking through calculating it myself here might be helpful to others and also help me.
I work at overtime rate of 10% above my usual rate. My last paycheck of 2025 includes total income worked at that rate and the actual hourly overtime rate.
Using simple numbers:
My last paycheck lists my earning $1100 total in overtime for 2025 at $11/hr, which is 10% above my usual rate of $10/hr.
$1100 divided by $11 is 100 (hours).
The difference between my regular and overtime rate is $1.
100 hours x $1= $100. That is my actual extra income above my usual hourly rate, and that is the number I would put in my tax return for overtime deduction.
Does that sound correct?
Is this how “no overtime on taxes” should be calculated?
byu/SealedRoute intax
Posted by SealedRoute
9 Comments
If your overtime rate is 10% above your regular rate then you are not subject to the overtime provisions of the federal law known as the Fair Labor Standards Act (FLSA), or your employer is violating the law. Only overtime which is required to be paid out under that law is covered.
sounds like your employer is skimping on documentation. maybe consult a tax pro for clarity.
>I work at overtime rate of 10% above my usual rate
I promise I read the rest of the post, but the moment you said this everything else stopped mattering. The Fair Labor Standards Act requires that you be paid ***50%*** above your usual rate when you’ve already worked 40 hours in a week, so if you’re only getting 10% there’s a problem.
The problem could be that your employer is breaking the law and paying you too little. That’s very bad. If that’s happening, look into it. A lot.
It’s more likely that the problem is simply that they’re calling it “overtime” when you work a long shift, or work on a weekend, or come in on a holiday. That is not “overtime” according to the FLSA. There’s nothing wrong with them calling it that, and there’s certainly nothing wrong with them paying you 10% extra for it (that’s very nice of them!) but the amount of your tax deduction for that is $0. There’s no tax benefit for having a nice employer.
It sounds like you are receiving some type of premium pay, but not FLSA overtime. That being the case, you don’t qualify for the overtime deduction. All of your pay will be taxed normally.
It sounds like you are an exempt employee, which I think is what you are referring to as white collar exemption. So it doesn’t sound like you can take the new deduction.
>In order for overtime to be required under 29 USC § 207, it must, among other requirements, be paid to an individual who is both covered by and not exempt from the FLSA (an FLSA-eligible employee).15 Thus, an individual who is ineligible for Federal overtime (an FLSA-ineligible employee) will generally not be paid overtime. However, some FLSA-ineligible employees are eligible for overtime under State law or are paid premium rates for certain work for other reasons. Overtime compensation paid to FLSA-ineligible employees is not qualified overtime compensation within the meaning
of section 225(c) with respect to such employment, regardless of applicable State law provisions or other circumstances causing these amounts to be paid.
That’s from Notice 2025-69, which is linked here:
https://www.irs.gov/newsroom/treasury-irs-provide-guidance-for-individuals-who-received-tips-or-overtime-during-tax-year-2025
It’s “no taxes on overtime”.
You sound like you are asking as if this has a factual answer. If there was a law exempting overtime pay from taxation, it would also provide a detailed explanation of what exactly that means and/or a formula. Right now, “no taxes on overtime” is just political promise that has not made any impact on legislation. Like “no taxes on tips”, tips and overtime are currently taxed as any other wage income.
If your position is exempt, then they are not required to pay you overtime. The extra pay they you are getting is just a “bonus” rate to incentivize you to put in extra time. This pay does not qualify for the “No Tax on OT” rule.
Y’all bought into this dummy’s b.s.?
Now get mad at me for pointing it out.