Overtime tax refund calculator
The deduction arrives as a smaller tax bill, which for most people filing with normal withholding means a bigger refund.
Where a refund actually comes from
A refund is just over-withholding coming back. If your employer withheld as though the deduction did not exist, which is the default, then the deduction reduces your liability without reducing what was already taken, and the gap is refunded.
That is why the deduction usually shows up as a refund rather than as extra pay: the whole benefit is deferred to filing by design.
Two cases
On $48,000 filing single, $20.00 an hour and 8 overtime hours a week for 44 weeks: qualified overtime of $3,520, all deductible, worth about $422.
On $76,000 filing jointly, $28.00 an hour and 10 overtime hours a week for 48 weeks: qualified overtime of $6,720, all deductible under the $25,000 joint cap, worth about $806.
| Regular rate | Overtime rate | Qualified overtime | Deduction | Tax saved |
|---|---|---|---|---|
| $16.00 | $24.00 | $2,944 | $2,944 | $353 |
| $20.00 | $30.00 | $3,680 | $3,680 | $442 |
| $24.00 | $36.00 | $4,416 | $4,416 | $530 |
| $28.00 | $42.00 | $5,152 | $5,152 | $618 |
| $32.00 | $48.00 | $5,888 | $5,888 | $707 |
| $38.00 | $57.00 | $6,992 | $6,992 | $839 |
What can shrink it
A bracket that is lower than you assumed. The saving is the deduction times your marginal rate. At 10% or 12% the same deduction returns half what it returns at 22%.
Income over the threshold. Past $150,000 of modified AGI, or $300,000 jointly, $100 of deduction goes for every full $1,000 of excess.
No tax to reduce. The deduction is not refundable. If credits and the standard deduction already take your liability to zero, this adds nothing.
Filing separately. A married person has to file jointly to claim it at all.
Common questions
- How much will I get back from the overtime deduction?
- The deduction multiplied by your marginal rate. $8,000 of qualified overtime is worth about $960 at 12% and about $1,760 at 22%.
- Is the overtime deduction refundable?
- No. It reduces taxable income, so it can only reduce tax you would otherwise owe. With no liability it is worth nothing.
- When will I receive it?
- When your return for that year is processed. Filing a new Form W-4 instead spreads part of it across your remaining paychecks.
- Will my refund go up by the full deduction?
- No. By the tax on the deduction, not the deduction itself. That difference is the most common surprise with this provision.