New Tax Deduction for Overtime

Attention hard-working Americans: Starting January 1, 2025, thanks to the One Big Beautiful Bill Act, there’s a new, powerful tax benefit designed just for you.

You can now deduct up to $12,500 of qualified overtime pay (the “extra half” of your “time-and-a-half” wage)—or $25,000 if filing jointly—from your federal taxable income each year through 2028. You do not have to itemize to get this above-the-line deduction.

The deduction phases out for higher earners—starting at $150,000 (single) or $300,000 (married filing jointly)—and is eliminated entirely at upper limits .