Overtime Tax Calculator: What the 2026 Deduction Saves

What the 2026 overtime deduction saves

On the defaults — a $60,000.00 salary, $8,000.00 of overtime, single — the total income is $68,000.00 ($60,000.00 + $8,000.00), the taxable income is $51,900.00 ($68,000.00 − $16,100.00), the marginal rate is 22%, the overtime deduction is $8,000.00 (the full overtime pay, under the $12,500 cap, no phaseout), the tax on overtime before the deduction is $1,760.00 ($8,000.00 × 22%), the tax after is $0.00, the tax saved is $1,760.00, and the effective tax rate on overtime is 0.00%.

Five things about the model are worth stating plainly. First, the total income is the salary plus the overtime — $60,000.00 + $8,000.00 = $68,000.00. Second, the taxable income is the total income minus the 2026 standard deduction — $68,000.00 − $16,100.00 = $51,900.00. Third, the marginal rate is the 2026 federal bracket the taxable income falls in — $51,900.00 is in the 22% bracket. Fourth, the deduction is the smaller of the overtime pay and the $12,500 cap, minus any phaseout reduction — here $8,000.00. And fifth, the tax saved is the tax before minus the tax after — $1,760.00 − $0.00 = $1,760.00 — and the saving is estimated at your marginal rate, so your real saving depends on your full return; all listed in Accuracy & limitations.

The worked example, line by line

Setup: $60,000.00 salary, $8,000.00 overtime, single.

Line 1 — the total income. The total income is $60,000.00 + $8,000.00 = $68,000.00.

Line 2 — the taxable income. The taxable income is $68,000.00 − $16,100.00 = $51,900.00.

Line 3 — the marginal rate. $51,900.00 falls in the 22% bracket (12% ends at $50,400.00 of taxable income).

Line 4 — the deduction. The deduction is the smaller of $8,000.00 of overtime and the $12,500 cap, with no phaseout — $8,000.00.

Line 5 — the tax and the saving. The tax before is $8,000.00 × 22% = $1,760.00, the tax after is ($8,000.00 − $8,000.00) × 22% = $0.00, and the saving is $1,760.00 − $0.00 = $1,760.00.

Every branch, checked

$45,000 salary, $5,000 OT, single: Salary $45,000.00, overtime $5,000.00, single: total income $50,000.00, taxable income $33,900.00, marginal rate 12%, overtime deduction $5,000.00, tax on overtime before $600.00, after $0.00, saved $600.00, effective tax rate on overtime 0.00% — At $45,000 of salary the overtime is only taxed at 12% — the deduction still wipes out the whole $600.00.

$100,000 salary, $15,000 OT, single: Salary $100,000.00, overtime $15,000.00, single: total income $115,000.00, taxable income $98,900.00, marginal rate 22%, overtime deduction $12,500.00, tax on overtime before $3,300.00, after $550.00, saved $2,750.00, effective tax rate on overtime 3.67% — At $100,000 of salary the $12,500 cap binds — $15,000.00 of overtime only gets a $12,500.00 deduction, so $550.00 of tax is left.

$60,000 salary, $8,000 OT, joint: Salary $60,000.00, overtime $8,000.00, joint: total income $68,000.00, taxable income $35,800.00, marginal rate 12%, overtime deduction $8,000.00, tax on overtime before $960.00, after $0.00, saved $960.00, effective tax rate on overtime 0.00% — Filing jointly doubles the standard deduction to $32,200 — the same $8,000.00 of overtime is only taxed at 12%, so the saving is $960.00.

$160,000 salary, $10,000 OT, single (phaseout): Salary $160,000.00, overtime $10,000.00, single: total income $170,000.00, taxable income $153,900.00, marginal rate 24%, overtime deduction $8,000.00 (total income $20,000.00 over the $150,000.00 threshold; phaseout reduction $2,000.00), tax on overtime before $2,400.00, after $480.00, saved $1,920.00, effective tax rate on overtime 4.80% — At $160,000 of salary the phaseout bites — $20,000.00 over the $150,000 threshold costs $2,000.00 of deduction, and the saving is $1,920.00.

$30,000 salary, $2,000 OT, single: Salary $30,000.00, overtime $2,000.00, single: total income $32,000.00, taxable income $15,900.00, marginal rate 12%, overtime deduction $2,000.00, tax on overtime before $240.00, after $0.00, saved $240.00, effective tax rate on overtime 0.00% — At $30,000 of salary the overtime is taxed at 12% — the deduction wipes out the whole $240.00.

$200,000 salary, $20,000 OT, single (deep phaseout): Salary $200,000.00, overtime $20,000.00, single: total income $220,000.00, taxable income $203,900.00, marginal rate 32%, overtime deduction $5,500.00 (total income $70,000.00 over the $150,000.00 threshold; phaseout reduction $7,000.00), tax on overtime before $6,400.00, after $4,640.00, saved $1,760.00, effective tax rate on overtime 23.20% — At $200,000 of salary the phaseout is deep — a $7,000.00 reduction leaves a $5,500.00 deduction, and the saving is $1,760.00.

$60,000 salary, $0 OT, single: Salary $60,000.00, overtime $0.00, single: total income $60,000.00, taxable income $43,900.00, marginal rate 12%, overtime deduction $0.00, tax on overtime before $0.00, after $0.00, saved $0.00, effective tax rate on overtime 0.00% — No overtime means no deduction and no saving — the tax on overtime is $0.00 because there is no overtime.

The reverses, worked backwards

Overtime pay where the deduction cap first binds (single, $60,000 salary): $12,500.00 — the exact overtime is 12500.0000. At the displayed $12,500.00 the deduction is $12,500.00, the tax before is $2,750.00, the tax after is $0.00, and the tax saved is $2,750.00. $12,501.00 gives a tax before of $2,750.22, a tax after of $0.22, and a tax saved of $2,750.00 — the first dollar over the cap costs $0.22 of tax. The star is DOLLARS.

Salary where the phaseout first bites (single, $10,000 OT): $140,000.00 — the exact salary is 140000.0000. At the displayed $140,000.00 the total income is exactly $150,000.00, the reduction is $0.00, the deduction is $10,000.00, the tax before is $2,400.00, the tax after is $0.00, and the tax saved is $2,400.00. $141,000.00 gives a total income of $151,000.00, $1,000.00 over the threshold, a reduction of $100.00, a deduction of $9,900.00, a tax after of $24.00, and a tax saved of $2,376.00. The star is DOLLARS.

Overtime pay for a tax saving of exactly $2,000.00 (single, $60,000 salary): $9,090.91 — the exact overtime is 9090.9091. At the displayed $9,090.91 the tax before is $2,000.00, the tax after is $0.00, and the tax saved is $2,000.00. $9,090.90 also rounds to a $2,000.00 tax before (unrounded $1,999.998) — $9,090.91 is the smallest cent amount whose unrounded tax reaches $2,000.00. The star is DOLLARS.

Salary where the marginal rate steps from 12% to 22% (single, $8,000 OT): $58,500.00 is the highest salary still at 12% (total $66,500.00, taxable $50,400.00) — the exact salary is 58500.0000. At the displayed $58,500.00 the tax before is $960.00 and the tax saved is $960.00. $58,501.00 is the lowest salary at 22% (total $66,501.00, taxable $50,401.00) — the tax before is $1,760.00 and the tax saved is $1,760.00. One dollar of salary costs $800.00 of tax on the overtime. The star is DOLLARS.

Salary where the deduction fully phases out to $0 (single, $10,000 OT): $240,000.00 — the exact salary is 240000.0000. At the displayed $240,000.00 the total income is $250,000.00, $100,000.00 over the threshold, the reduction is $10,000.00, the deduction is $0.00, the tax before is $3,200.00, the tax after is $3,200.00, the tax saved is $0.00, and the effective tax rate on overtime is 32.00%. $239,000.00 gives a total income of $249,000.00, a reduction of $9,900.00, a deduction of $100.00, a tax after of $3,168.00, and a tax saved of $32.00. The star is DOLLARS.

Salary where the joint phaseout first bites (joint, $10,000 OT): $290,000.00 — the exact salary is 290000.0000. At the displayed $290,000.00 the total income is exactly $300,000.00, the reduction is $0.00, the deduction is $10,000.00, the tax before is $2,400.00, the tax after is $0.00, and the tax saved is $2,400.00. $291,000.00 gives a total income of $301,000.00, $1,000.00 over the threshold, a reduction of $100.00, a deduction of $9,900.00, a tax after of $24.00, and a tax saved of $2,376.00. The star is DOLLARS.

What the defaults assume

The defaults are a $60,000.00 salary, $8,000.00 of overtime, and single — total income $68,000.00, taxable income $51,900.00, marginal rate 22%, deduction $8,000.00, tax saved $1,760.00. With a $45,000 salary and $5,000 of overtime, Salary $45,000.00, overtime $5,000.00, single: total income $50,000.00, taxable income $33,900.00, marginal rate 12%, overtime deduction $5,000.00, tax on overtime before $600.00, after $0.00, saved $600.00, effective tax rate on overtime 0.00% — the tax saved is $600.00 and the effective tax rate on overtime is 0.00%. With a $100,000 salary and $15,000 of overtime, Salary $100,000.00, overtime $15,000.00, single: total income $115,000.00, taxable income $98,900.00, marginal rate 22%, overtime deduction $12,500.00, tax on overtime before $3,300.00, after $550.00, saved $2,750.00, effective tax rate on overtime 3.67% — the tax saved is $2,750.00 and the effective tax rate on overtime is 3.67%. Filing jointly, Salary $60,000.00, overtime $8,000.00, joint: total income $68,000.00, taxable income $35,800.00, marginal rate 12%, overtime deduction $8,000.00, tax on overtime before $960.00, after $0.00, saved $960.00, effective tax rate on overtime 0.00% — the tax saved is $960.00 and the effective tax rate on overtime is 0.00%. With a $160,000 salary and $10,000 of overtime, Salary $160,000.00, overtime $10,000.00, single: total income $170,000.00, taxable income $153,900.00, marginal rate 24%, overtime deduction $8,000.00 (total income $20,000.00 over the $150,000.00 threshold; phaseout reduction $2,000.00), tax on overtime before $2,400.00, after $480.00, saved $1,920.00, effective tax rate on overtime 4.80% — the tax saved is $1,920.00 and the effective tax rate on overtime is 4.80%. With a $30,000 salary and $2,000 of overtime, Salary $30,000.00, overtime $2,000.00, single: total income $32,000.00, taxable income $15,900.00, marginal rate 12%, overtime deduction $2,000.00, tax on overtime before $240.00, after $0.00, saved $240.00, effective tax rate on overtime 0.00% — the tax saved is $240.00 and the effective tax rate on overtime is 0.00%. With a $200,000 salary and $20,000 of overtime, Salary $200,000.00, overtime $20,000.00, single: total income $220,000.00, taxable income $203,900.00, marginal rate 32%, overtime deduction $5,500.00 (total income $70,000.00 over the $150,000.00 threshold; phaseout reduction $7,000.00), tax on overtime before $6,400.00, after $4,640.00, saved $1,760.00, effective tax rate on overtime 23.20% — the tax saved is $1,760.00 and the effective tax rate on overtime is 23.20%. With $0 of overtime, Salary $60,000.00, overtime $0.00, single: total income $60,000.00, taxable income $43,900.00, marginal rate 12%, overtime deduction $0.00, tax on overtime before $0.00, after $0.00, saved $0.00, effective tax rate on overtime 0.00% — the tax saved is $0.00 and the effective tax rate on overtime is 0.00%. With $0 salary and $8,000 of overtime, Salary $0.00, overtime $8,000.00, single: total income $8,000.00, taxable income $0.00, marginal rate 10%, overtime deduction $8,000.00, tax on overtime before $800.00, after $0.00, saved $800.00, effective tax rate on overtime 0.00% — the tax saved is $800.00. With a $500,000 salary and $30,000 of overtime, Salary $500,000.00, overtime $30,000.00, single: total income $530,000.00, taxable income $513,900.00, marginal rate 35%, overtime deduction $0.00 (total income $380,000.00 over the $150,000.00 threshold; phaseout reduction $38,000.00), tax on overtime before $10,500.00, after $10,500.00, saved $0.00, effective tax rate on overtime 35.00% — the tax saved is $0.00. With a $25,000 salary and $3,000 of overtime, Salary $25,000.00, overtime $3,000.00, single: total income $28,000.00, taxable income $11,900.00, marginal rate 10%, overtime deduction $3,000.00, tax on overtime before $300.00, after $0.00, saved $300.00, effective tax rate on overtime 0.00% — the tax saved is $300.00. With a $149,000 salary and $10,000 of overtime, Salary $149,000.00, overtime $10,000.00, single: total income $159,000.00, taxable income $142,900.00, marginal rate 24%, overtime deduction $9,100.00 (total income $9,000.00 over the $150,000.00 threshold; phaseout reduction $900.00), tax on overtime before $2,400.00, after $216.00, saved $2,184.00, effective tax rate on overtime 2.16% — the tax saved is $2,184.00. With a $60,000 salary and $100,000 of overtime, Salary $60,000.00, overtime $100,000.00, single: total income $160,000.00, taxable income $143,900.00, marginal rate 24%, overtime deduction $11,500.00 (total income $10,000.00 over the $150,000.00 threshold; phaseout reduction $1,000.00), tax on overtime before $24,000.00, after $21,240.00, saved $2,760.00, effective tax rate on overtime 21.24% — the tax saved is $2,760.00. With overtime pay of -$500.00, the calculator shows an error — enter an overtime amount of $0 or more — not a tax figure.

Output · formula · meaning

Who uses this

• The worker with regular overtime: they learn $8,000.00 of overtime on a $60,000.00 salary saves the whole $1,760.00 of federal tax — and they check the $12,500.00 reverse to see where the deduction cap first binds.
• The high earner checking the phaseout: they learn a $160,000.00 salary loses $2,000.00 of deduction to the phaseout — and they check the $140,000.00 reverse to see where the phaseout first bites.
• The married worker: they learn the same $8,000.00 of overtime saves $960.00 filing jointly — and they check the $290,000.00 reverse to see where the joint phaseout first bites.
• The worker near a bracket edge: they learn one dollar of salary at $58,500.00 costs $800.00 of tax on the overtime — and they check the $9,090.91 reverse to see the overtime that saves exactly $2,000.00.

Accuracy & limitations

The math is first-principles: the total income is the salary plus the overtime, the taxable income is the total minus the 2026 standard deduction, the marginal rate is the 2026 federal bracket, the deduction is the smaller of the overtime and the cap minus the phaseout reduction (rounded to cents half-up), and the tax saved is the tax before minus the tax after. What the model cannot do is file your return: this estimates FEDERAL INCOME TAX only — the deduction does not reduce Social Security or Medicare (payroll) tax, and it does not change state tax (most states do not follow it); the saving is estimated at your marginal rate, so your real saving depends on your full return (other income, credits, itemised vs standard deduction); only overtime that qualifies under the FLSA counts (overtime your employer must report as such — regular extra hours that are not FLSA overtime do not qualify); you need a Social Security number to claim it; the deduction ends after tax year 2028 unless Congress extends it; and a negative overtime amount shows an error, not a tax figure. Use it to see what the 2026 deduction is worth at your salary — then check your pay stub and your tax software before you count on it.

Frequently asked questions