I built a free no-tax-on-overtime calculator — here is the OBBBA §70202 math

I have been learning SEO this year, and my first real project is a free calculator for the new US federal overtime tax deduction. Building it forced me to read the actual statute (OBBBA §70202, new IRC §225), because most existing calculators get the math wrong. Here is what the law actually says, with the numbers worked out.

What the deduction actually is

For tax years 2025 through 2028, employees can deduct the FLSA overtime premium from their federal taxable income. The key word is premium. Only the extra half (0.5x) you earn on overtime hours qualifies, not your full overtime pay. If you earn $25/hour and work 10 overtime hours, your overtime pay is $375, but the deductible premium is only $125 (10 hours x $12.50).

Most calculators I found either deduct the full overtime amount or ignore the caps entirely. Both are wrong.

The caps and the phaseout

The deduction is capped at $12,500 per year for single and head of household filers, $25,000 for married filing jointly. Then it phases out: the cap shrinks by $100 for every $1,000 of MAGI above $150,000 (single) or $300,000 (joint), hitting zero at $275,000 / $550,000. The phaseout uses a floor rule, so even $1 over a $1,000 bracket costs you the full $100.

Worked example: $25/hour, 10 overtime hours every week, 22% bracket. Annual premium = $6,500. Tax savings = $6,500 x 0.22 = $1,430.

Phaseout example: single filer, $165,000 MAGI. That is $15,000 over the threshold, so the cap drops by $1,500 to $11,000.

What does not qualify

FICA and state taxes still apply to the premium. Married filing separately is excluded. Salaried exempt workers, contractors, and gig workers are out. If you work two jobs, the cap combines across both. And your employer reports the premium in W-2 Box 12 under Code TT starting with tax year 2026.

The build

The calculator itself is a static site, all the math runs client side in the browser with no signup and no data leaving the page. The phaseout floor rule and the two-job cap combining were the fiddliest parts to get right. I also built a second calculator that does pay plus tax together, since most people search for that.

If you work overtime: MyOvertimeTax — free no tax on overtime calculator and the overtime pay + tax calculator.

I am still learning, so if any tax pro spots something off in my reading of the statute, I genuinely want to know. The IRS sources I used are FS-2026-13 and Notice 2025-69.