02/18/2026
π¨ Overtime Pay & Taxes β Letβs Clear Up the Confusion! π¨
Thereβs been a LOT of misinformation floating around about overtime and taxes. Letβs break down the myths vs. reality π
β Myth: All overtime pay is tax-free.
β
Reality: Only the βpremiumβ portion (the extra 0.5x β not the full 1.5x rate) may qualify for the deduction.
β Myth: You pay no taxes on overtime at all.
β
Reality: Overtime is STILL subject to Social Security, Medicare, and possibly state & local taxes.
β Myth: The deduction is automatic for everyone.
β
Reality: It is NOT automatic. Phase-outs apply if your Modified Adjusted Gross Income (MAGI) exceeds:
β’ $150,000 (Single)
β’ $300,000 (Married Filing Jointly)
β Myth: Married couples can file separately and still claim it.
β
Reality: Married taxpayers must file a joint return to claim the deduction.
β Myth: It applies to all extra hours worked.
β
Reality: It only applies to qualified overtime required under the Fair Labor Standards Act (FLSA).