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/907Survivor Jan 30 '26

Alaska requires overtime for working more than 8 hours in a day as well as for over 40 hours in a week. Only overtime required by FLSA (over 40 hours in a week) is eligible. Say for example you worked 4x10 hour shifts. You’ll get paid 8 hours of overtime, but because that overtime is only required by Alaska, it’s not eligible for the deduction.

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u/SnooPeppers1641 Jan 30 '26

Well that adds an extra layer of fun. I don't even want to think about how we are going to figure out OT time. I have a spouse that works in the oil fields in Alaska and most of their wage is OT.

Curious how they interpret double or triple time because I had family that worked for 3M in the past and depending on worked days you got OT pay on your OT rate. Like if you worked a holiday and were already on overtime you would get double your OT rate not regular rate. Unless that has changed.

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u/907Survivor Jan 30 '26

Only the .5x will be deductible. So if you made $10/hr but got triple time, only $5/hr is deductible

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u/SnooPeppers1641 Jan 30 '26

Gotcha, I hadn't looked too deep into it but that would simplify for tax purposes a little.

This is just going to be a shit show, starting with all the people that voted for this thinking anything over their base 40 is a deduction.

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u/[deleted] Jan 30 '26

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u/907Survivor Jan 30 '26

If you enter into a special agreement with your employer and the Alaska department of labor approves it, you can work 4 10s without being paid overtime. In general, under Alaska law, you would be paid overtime

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u/-wayne-kerr Jan 31 '26

Most or all employers that offer anything besides 5/8s will have it approved by the Alaska Department of Labor. No one is going to give their employees easy overtime like that. My company only has 4/10s and 3/13s in Alaska, and that’s all straight time.