New Federal Overtime Tax Deduction [developing]
Key Questions
What is the new federal overtime tax deduction?
Qualified overtime pay up to $12,500 for single filers or $25,000 for joint filers is deductible for tax years 2025-2028 using Schedule 1-A. It applies only to FLSA non-exempt workers' extra half-pay for overtime. MAGI phaseouts begin at $150,000 single/$300,000 joint.
Who qualifies for the overtime tax deduction?
Eligibility is limited to non-exempt workers under FLSA whose overtime premium pay is separately reported. Employer reporting exemptions can confuse self-filers claiming the deduction. It particularly impacts California W-2 workers.
How does the overtime deduction affect tax refunds and state returns?
Recent articles detail rules and examples for maximizing refunds through payroll or W-4 adjustments. State conformity questions remain amid rising average refunds. Filers should check state-specific rules when claiming federal breaks for tips and overtime.
Qualified overtime pay up to $12.5k single/$25k joint (FLSA-only non-exempt extra half-pay) deductible for 2025-2028 per Schedule 1-A; MAGI phaseouts at $150k/$300k, employer reporting exemptions cause self-filer confusion. Impacts CA W-2 workers; recent articles detail rules/examples for max refunds via payroll/W-4 tweaks. Conformity questions linger amid avg refund rise.