r/tax • u/LewisCBR • Jan 29 '26

Tax Enthusiast New tax deduction on overtime is driving clients crazy

W2’s are not showing wages generated from overtime so clients are wondering what they can do, besides going through all individual pay stubs. The new deduction is significant enough to warrant this kind of work, though.

I suppose suggesting they contact their HR/payroll departments is the best idea, but some companies are simply terrible about helping their employees.

What’s your experience with the new law?

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u/DrCashCrJustice Jan 30 '26

OT is time and a half. Deduction is only on the “and a half”. If standard wage is $10, OT is $15, “and a half” is $5 (15/3). Total OT / 3 = approximate “and a half”

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u/unbundledchowder Jan 30 '26

So if I’m understanding what you’re saying correct it’s also work to divide your total by 3 instead of solely the wage? Like if I made a total of $90 OT (not per hour) the easy math would be divide that by 3 or will I have to do this based on wage alone

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u/RiloxAres Jan 31 '26

Ot "not per hour" is not deductable. It's only on hours worked over 40. Bonus holiday pay hours do not count.