What does no tax on overtime mean?

Starting in 2025, there's a deduction for overtime income. This has sometimes been called, "no tax on overtime". You can deduct up to $12,500 ($25,000 if married filing jointly) of your income from overtime.

To qualify, you'll need to:

• Have a Social Security number
• Be unmarried or file jointly with your spouse if you are married

The deduction phases out if your income is more than $150,000 or $300,000 if married filing jointly.

We'll ask you how much of your income is from overtime when you enter income on your W-2, 1099-MISC, or 1099-NEC.