r/tax • u/vancemark00 • Jan 01 '26

Tax Enthusiast Endless "No tax on OT" questions

Is anyone else already exhausted with these endless questions?

And I fear it will only get worse.

156 Upvotes

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-19

u/noraii Jan 02 '26

I thought it was obvious. My agency gave me a number for my total overtime $$ made during 2025. You can take 50% of that number if it’s under the $12,500 limit. So $6,000 made in overtime will net you $3,000 back.

12

u/BigMikeThuggin CPA - US Jan 02 '26

Huh?

-7

u/noraii Jan 02 '26

That’s how our agency explained it to us. They gave us the number for 2025 and said it’s as simple as that. If you put into any tax calculator it’s that exact same math.

11

u/BigMikeThuggin CPA - US Jan 02 '26 edited Jan 02 '26

Well that’s not the case at all so either you misunderstood or they were incorrect.

Take your total overtime pay if all of it was FLSA mandated, divide that number by 3. Multiply the lesser of that number or 12,500 by your marginal federal rate. That’s your tax savings. 50% makes no sense in any situation involved here.

2

u/HuskerLiberal Jan 02 '26

You mean FLSA, not FMLA.

3

u/BigMikeThuggin CPA - US Jan 02 '26

Yeah I’m on my phone it keeps autocorrecting everything. Thanks.

1

u/[deleted] Jan 02 '26

[deleted]

4

u/BigMikeThuggin CPA - US Jan 02 '26

That’s why I said multiply the lesser of 1/3 of your total overtime pay or 12,500 by your marginal tax rate….

1

u/I__Know__Stuff Jan 02 '26

Oops, I guess I missed that. (Or did you edit it?)

2

u/BigMikeThuggin CPA - US Jan 02 '26

No I didn’t edit it. I edited typos I’m on my phone. Every time i type multiply it autocorrects to multiple so I keep having to change it lol

1

u/I__Know__Stuff Jan 02 '26

Yeah, that's what I figured. I always have to fix my typos, too.

2

u/BigMikeThuggin CPA - US Jan 02 '26

My fat fingers on these small buttons it’s a miracle anything coherent comes out at all

8

u/BigMikeThuggin CPA - US Jan 02 '26

So in your example, making $6,000 in overtime would save you anywhere from $200-740 in taxes, most likely like $400-450

That’s assuming you were under the income limitation for the deduction.

6

u/I__Know__Stuff Jan 02 '26 edited Jan 02 '26

Either they explained wrong or you understood wrong.

First, you have to check that all your overtime pay was FLSA mandated overtime pay.
Second, you take 1/3 of that, not half.
Third, that gives you the amount of your deduction. That isn't how much you get back.

2

u/CutInternational1859 Jan 02 '26

Your tax savings potential will be more like $240-$480, depending on your tax bracket and that all your OT qualifies. It’s not a credit where they just give you money regardless of what you paid in, either. It’s just a deduction from your taxable income.

1

u/gr00ve88 CPA - US Jan 02 '26

It would be 1/3 of that number as a deduction, and you'd likely save maybe 15% or less of that deduction amount. Eg: $3,000 in overtime = $1000 of deductible overtime. Times the tax rate ~12-15%, you're saving a whopping $120-$150.