Jeremy unpacks the "no tax on overtime" deduction created by the One Big Beautiful Bill Act, explaining why the name is misleading since qualified overtime compensation is still taxable income subject to withholding, FICA, and (in most states) state tax. He walks through how to isolate the FLSA overtime premium from gross overtime pay, calculate the deduction on the new Schedule 1A, and apply the filing status caps and MAGI phaseouts through real client examples. He also flags the reporting changes coming in 2026, when employers must correctly report the amounts on Form W-2, Box 12, Code TT, and the relaxed 2025 transition rules disappear.
Connect with Jeremy
https://www.linkedin.com/in/jwellstax
https://www.steadfastbookkeeping.com
Subscribe on YouTube
https://www.youtube.com/@TaxinAction
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This podcast is a production of Earmark Media
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- (00:00) - No Tax On Overtime Intro
- (01:44) - What You Will Learn
- (03:11) - Where It Lives In The Code
- (07:27) - Deduction Not An Exclusion
- (09:25) - Caps Phaseouts And MAGI
- (13:09) - Defining Qualified Overtime
- (16:20) - Workweek Rules Under FLSA
- (26:30) - Exemptions And Who Qualifies
- (30:23) - SSN And Filing Status Limits
- (33:40) - 2025 Transition Relief
- (36:29) - 2026 Reporting Box 12 TT
- (41:22) - Examples And Calculations
- (51:37) - Schedule 1A Walkthrough
- (52:39) - Key Takeaways And Wrap Up
Connect with Jeremy
https://www.linkedin.com/in/jwellstax
https://www.steadfastbookkeeping.com
Subscribe on YouTube
https://www.youtube.com/@TaxinAction
Earn CPE for Listening to This Podcast
https://www.earmark.app/
This podcast is a production of Earmark Media