What form do I use to claim the overtime deduction?

Schedule 1-A, filed with Form 1040, 1040-SR or 1040-NR. The total carries to line 13b of the 1040.

Can I claim it if I take the standard deduction?

Yes. It is allowed whether you itemize or not, because it sits under section 63(b) rather than among itemized deductions.

What if my W-2 does not show code TT?

For 2026 onward you need the employer to issue a corrected W-2c, since you may only deduct an amount reported in that box. A Form 4852 substitute is not accepted for this.

Does claiming it change my take-home pay?

Only if you file a new Form W-4 reflecting the expected deduction. Otherwise it shows up at filing time as a smaller bill or a larger refund.

Overtime tax deduction

The deduction is claimed on your return, on a form that did not exist before 2025.

Where it goes on the return

Qualified overtime is worked out on Schedule 1-A, the schedule introduced for the new deductions. The total from that schedule is carried to line 13b of Form 1040, which sits below adjusted gross income on line 11 and alongside your standard or itemized deduction on line 12.

That position is the whole story of how this deduction behaves. It reduces taxable income, not AGI, and it is open to you whether you itemize or take the standard deduction.

The figure you start from

For tax year 2026, employers must report total qualified overtime in box 12 of Form W-2 under code TT. The amount reported is not capped, so it will often exceed the $12,500 or $25,000 you can actually deduct.

From 2026 the reporting is not optional for you either: you may deduct only an amount that appears in that box. If it is missing or understated, you need a corrected Form W-2c from your employer, and you cannot substitute a Form 4852.

Tax year 2025 worked differently. No separate reporting was required, the IRS gave penalty relief to employers in Notice 2025-62, and taxpayers were pointed to the reasonable methods in Notice 2025-69 for working the figure out from pay records.

Withholding is a separate question

Claiming the deduction does not change what comes out of your paycheck. Your employer may not reduce withholding on account of it unless you give them an updated Form W-4.

The 2026 Form W-4 has a line for this on the Deductions Worksheet, covering qualified tips and the time-and-a-half portion of overtime, which then feeds into Step 4(b). The withholding tables themselves were not changed for these deductions; the 2026 table changes came from the permanent rate and standard deduction provisions of the same act.

Common questions

What form do I use to claim the overtime deduction?: Schedule 1-A, filed with Form 1040, 1040-SR or 1040-NR. The total carries to line 13b of the 1040.
Can I claim it if I take the standard deduction?: Yes. It is allowed whether you itemize or not, because it sits under section 63(b) rather than among itemized deductions.
What if my W-2 does not show code TT?: For 2026 onward you need the employer to issue a corrected W-2c, since you may only deduct an amount reported in that box. A Form 4852 substitute is not accepted for this.
Does claiming it change my take-home pay?: Only if you file a new Form W-4 reflecting the expected deduction. Otherwise it shows up at filing time as a smaller bill or a larger refund.