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March 5, 2026
Under the One, Big, Beautiful Bill, if you receive qualified overtime compensation, you may deduct the pay that exceeds your regular rate of pay. For 2025, employers aren’t required to report qualified overtime compensation separately on Forms W-2, 1099-NEC, and 1099-MISC. If you don’t receive a statement reporting the amount of qualified overtime compensation, use the new Schedule 1-A Instructions to calculate the amount.
- Maximum annual deduction is $12,500; $25,000, if you file jointly.
- Deduction phases out if your modified adjusted gross income is over $150,000; $300,000, if you file jointly.
- Must have a valid Social Security number.
- If married, you must file jointly.
- Deduction is available regardless of whether you itemize or take the standard deduction.
For more information, review the frequently asked questions about the new deduction for qualified overtime compensation.