Overtime Deduction Phase-Out Calculator 2026

Once you know your qualifying overtime premium, this calculator shows how much of it you can actually deduct after the income phase-out. It caps the premium at your filing-status limit, then reduces the result by $100 for every $1,000 your MAGI exceeds the threshold.

Remember to enter only the premium portion of your overtime — the extra half-time, not your full overtime wages. If you're unsure, use the premium-pay checker first, then bring that number here.

Unlike the tips deduction (a flat $25,000 for everyone), the overtime cap depends on filing status: $12,500 for single filers and $25,000 for married couples filing jointly. That difference matters most for dual-earner households where both spouses work overtime — jointly they share the $25,000 cap.

The phase-out then applies on top of the cap. A single filer with a $14,000 premium and $170,000 MAGI is first capped at $12,500, then reduced by $2,000 (20 increments over $150k × $100), leaving $10,500.

Because only the premium counts, most workers' qualifying amount is far smaller than their total overtime pay — often one-third of it for time-and-a-half. That means the caps ($12,500 / $25,000) are rarely the binding limit for typical hourly workers; the premium amount usually is. High earners are the ones who hit the phase-out.