No Tax on Overtime Income Limits & Phase-Out Chart

Where the zero point comes from

The statute does not publish an ending income — it publishes a rate, and the ending point follows from arithmetic. Wiping out a $12,500 cap at $100 per $1,000 takes 125 increments, which is $125,000 of excess MAGI on top of the $150,000 threshold. That is $275,000. The joint figures are double throughout, so joint filers reach zero at $550,000.

Phase-out chart

Maximum deduction at a given modified AGI, assuming you earned at least that much qualified overtime premium. Computed from the statutory rule, not transcribed.

Single — cap $12,500

Modified AGI	Max deduction
$150,000	$12,500
$170,833	$10,500
$191,667	$8,400
$212,500	$6,300
$233,333	$4,200
$254,167	$2,100
$275,000	$0

Married filing jointly — cap $25,000

Modified AGI	Max deduction
$300,000	$25,000
$341,667	$20,900
$383,333	$16,700
$425,000	$12,500
$466,667	$8,400
$508,333	$4,200
$550,000	$0

The cap is rarely what stops you

For most hourly workers the $12,500 ceiling is theoretical. Because only the 0.5x premium counts, reaching the cap takes an enormous amount of overtime — at $25/hour the premium is $12.50 an overtime hour, so the cap needs 1,000 overtime hours in a year. The practical limit is how much overtime exists, not the statutory one. The overview page works this out across every wage this site covers.

The phase-out is what catches dual-income households

The threshold applies to the return, not the person. Two earners at $160,000 each file jointly at $320,000 of AGI and are $20,000 into the phase-out — losing $2,000 of the $25,000 cap — even though neither would be near the single threshold alone. If overtime income is a meaningful part of your year and you are close to the line, anything that legitimately lowers AGI (pre-tax retirement contributions, HSA contributions) protects the deduction as well. That is a conversation for a tax professional, not a calculator.

A deduction is not a refund

Being under every limit does not mean you receive $12,500. You receive a reduction in taxable income of up to that much, worth the amount times your marginal rate — roughly $2,750 at 22% on a full $12,500 deduction. And it applies to federal income tax only; Social Security and Medicare still apply to all of your overtime. The mechanics are on how it works.

Check your own numbers

The no tax on overtime calculator applies the cap and the phase-out together — enter your modified AGI and it shows the reduction. If you are not sure you are eligible at all, start with who qualifies.

Income limits — FAQ

What is the income limit for no tax on overtime?

There are two different limits. The deduction itself is capped at $12,500 of qualified overtime a year ($25,000 on a joint return). Separately, that cap is reduced by $100 for every $1,000 of modified adjusted gross income above $150,000 single or $300,000 joint. Follow that to its end and the deduction reaches zero at $275,000 of MAGI single, $550,000 joint.

Is there a minimum income to qualify?

No. There is no floor. But because it is a deduction rather than a refundable credit, it only helps to the extent you owe federal income tax — if your taxable income is already zero after the standard deduction, an extra deduction has nothing left to reduce.

What counts as modified AGI here?

Your adjusted gross income with certain foreign-income exclusions added back. For the large majority of domestic wage earners, modified AGI and AGI are the same number — the add-backs involve foreign earned income and possessions exclusions that most filers do not have.

Is the phase-out based on my overtime or my total income?

Your total modified AGI, not your overtime. That is what surprises dual-income households: a joint return combines both incomes against the $300,000 threshold, so a couple can each earn well under it and still land in the phase-out together.

Do the caps get adjusted for inflation?

The statutory figures are $12,500 and $25,000, with thresholds at $150,000 and $300,000, and the provision runs only through 2028. Check the current-year IRS guidance before you file rather than assuming a figure carried over unchanged.

No Tax on Overtime Income Limits