United States · Federal·Updated for 2026·Figures in USD · a federal estimate, not tax advice
Tax Refund Calculator With Overtime (2026)
The overtime deduction lowers your taxable income, so it makes your federal refund bigger or your balance due smaller when you file. It does not change your regular paycheck unless you update your W-4. Enter your income, qualified overtime and the tax withheld to see your 2026 refund with and without it.
Your 2026 return
$
Wages and other income, including your overtime pay. Used as your MAGI for the phase-out
$
Only the premium (the “half” of time-and-a-half). Your W-2 box 12 code TT, or regular rate × 0.5 × overtime hours
$
From your pay stubs or W-2 box 2. Enter 0 if none
$
Credits that reduce your tax, such as the child tax credit. Leave blank if none
Enter your income, qualified overtime and the tax withheld. Your estimated refund appears here as you type — there is no button to press.
Calculating
Your refund with and without the deduction
Same income, same tax withheld. The only difference is whether the overtime deduction is claimed on Schedule 1-A.
Without the deduction
Taxable income
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Federal tax
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Refund
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With the deductionClaimed on Schedule 1-A
Taxable income
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Federal tax
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Refund
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Enter your details above to compare the two with your own numbers.
Show the mathsSee how this was worked outHide
A federal-only estimate for tax year 2026. Your income is treated as your MAGI. It leaves out state tax, self-employment tax and most credits, and a credit cannot take your tax below zero here. Confirm your figures against your tax return or a tax professional.
Updated ·Source: IRS guidance·Runs entirely in your browser — nothing is uploaded
Policy figures last verified September 24, 2026. This page covers tax year 2026 only. Tax rules can change, so check the IRS sources listed below.
How the overtime deduction changes your tax refund
Your refund is the tax your employer withheld minus the tax you actually owe. The overtime deduction cuts the tax you owe by lowering your taxable income. Withholding is unchanged, so the whole saving lands on your return as a bigger refund or a smaller bill. The saving is your deduction multiplied by the tax rate on the top slice of your income, and the calculator works that out bracket by bracket.
Will my paycheck change?
Not by itself. The IRS's withholding guidance for 2025 says employees who want withholding to reflect the deduction must give their employer a new Form W-4 and enter the deductions worksheet result in Step 4(b). The page does not say whether employers must adjust withholding on their own, and it describes the 2025 form. Check current IRS guidance for the 2026 W-4. If you do nothing, expect the benefit at filing time.
How your refund is calculated
Step by step
Qualified overtime. Only the premium portion counts, the "half" in time-and-a-half.
The cap. The deduction is at most $12,500, or $25,000 on a joint return.
The phase-out. It falls by $100 for every full $1,000 of modified adjusted gross income above $150,000 ($300,000 joint). A partial thousand is rounded down, as line 19 of Schedule 1-A instructs.
Taxable income. Income minus the standard deduction ($16,100 single, $32,200 joint, $24,150 head of household for 2026) minus the overtime deduction.
Tax. Taxable income through the 2026 brackets, less any credits you enter.
Refund. Tax withheld minus tax owed. A negative result is a balance due.
Who qualifies for the overtime deduction
Last verified September 24, 2026 against the IRS pages listed under Sources.
What counts as qualified overtime
Only overtime that federal law (the Fair Labor Standards Act) requires, and only the part above your regular rate. The IRS's own example: at $20 an hour with 10 overtime hours, the qualified amount is $100, the $10 premium times 10 hours, not the full $300 of overtime pay.
Filing and ID rules
You need a valid Social Security number, and married taxpayers must file jointly. The deduction is available whether you itemize or take the standard deduction, and it applies to tax years 2025 through 2028.
How your employer reports it
From 2026, employers report qualified overtime in box 12 of your Form W-2 using code TT. That figure is the total paid, so it can be higher than the amount you can actually deduct. If it looks wrong, your employer files a corrected W-2c. You claim the deduction on Schedule 1-A (Form 1040), Part III.
Overtime refund examples
These use the same engine as the calculator, with no other credits and the 2026 figures.
Example
Income
Qualified overtime
Deduction
Result without
Result with
Difference
Single, steady overtime
$60,000
$3,000
$3,000
$980.00
$1,340.00
$360.00
Married filing jointly
$120,000
$8,000
$8,000
$40.00 owed
$920.00
$960.00
Single, capped and phased down
$165,000
$27,000
$11,000
$1,666.00
$4,306.00
$2,640.00
In the last example, $27,000 of qualified overtime is capped at $12,500 and then reduced by$1,500 because income is $15,000 over the $150,000 threshold, leaving a $11,000 deduction. The withheld amounts are made-up examples, not typical figures.
What this estimate leaves out
State income tax. Whether your state follows the federal deduction varies.
Self-employment tax and other taxes.
Most credits. You can enter a total for credits like the child tax credit, but a credit cannot take your tax below zero here, so refundable credits are not modelled.
Married filing separately, which is not eligible for the deduction.
Your exact modified adjusted gross income. The calculator uses your total income, and the IRS points to Notice 2025-69 for the precise definition.
Tax year 2025 returns. This page uses the 2026 brackets and standard deductions only.
Tax refund with overtime: FAQ
Does the overtime deduction increase my tax refund?
Yes. The deduction lowers your taxable income, so your tax bill falls, and a lower bill means a bigger refund or a smaller balance due. In the first example below, $3,000 of qualified overtime turns a $980.00 refund into $1,340.00.
Will my paycheck change, or do I need a new W-4?
Not automatically. The deduction is claimed on your tax return, so your regular withholding does not change on its own. The IRS's withholding guidance for 2025 says employees who want their withholding to reflect the deduction must give their employer a new Form W-4 with the deductions worksheet result in Step 4(b). It does not say employers must adjust withholding themselves. Check current IRS guidance for the 2026 Form W-4.
How do I calculate my tax refund with overtime?
Work out your qualified overtime (only the premium half), apply the cap and the income phase-out, and subtract the result and the standard deduction from your income. Run that through the tax brackets and compare the tax with what your employer withheld. The calculator above does all of it and shows each step.
Is overtime pay tax-free now?
No. It is a deduction, not an exemption. Only the premium portion of your overtime counts, up to a cap, and it phases out at higher incomes. You claim it on Schedule 1-A of your federal return. Whether your state follows the federal deduction varies, so check your state.
What overtime counts as qualified overtime?
Only the amount above your regular rate that federal law requires, such as the "half" in time-and-a-half. The IRS gives this example: at $20 an hour with 10 overtime hours, the qualified overtime is $100 (a $10 premium times 10 hours), not the full $300 of overtime pay.
Do I need to itemize to claim it?
No. The IRS says the deduction is available whether you itemize or take the standard deduction.
Can married couples filing separately claim it?
No. If you are married, you must file jointly to claim the overtime deduction, and you need a valid Social Security number.
How much can I deduct?
Up to $12,500, or $25,000 on a joint return. The deduction is reduced by $100 for every full $1,000 that your modified adjusted gross income is above $150,000 ($300,000 on a joint return). This calculator uses your total income as your MAGI, so check the IRS definition if yours differs.
Does this calculator work for my 2025 return?
No. This page covers tax year 2026, the return you file in 2027, using the 2026 brackets and standard deductions. The deduction also applies to 2025, but 2025 figures are not built into this page yet.
How accurate is the estimate?
The deduction follows the IRS rules and the tax is worked through the 2026 brackets. It is still an estimate: it ignores state tax, self-employment tax and most credits, and it treats your total income as your MAGI. Use it to plan, then confirm on your actual return.
