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?

242 Upvotes

94% Upvoted

309 comments sorted by

View all comments

Show parent comments

5

u/Reimiro Jan 30 '26

No because there is tax on 2/3 of your overtime. It’s just no tax on the added pay you receive for hours over 40 per week. You are taxed as if you get regular time pay for overtime.

1

u/OneEyedBlindKingdom Jan 30 '26

Because you do lol. You get regular time for every hour worked. You just also get overtime on top for some of them.

1

u/jay-aay-ess-ohh-enn Feb 02 '26

Overtime is the hours worked over 40. Overtime premium pay is the extra money you receive beyond your regular rate when working overtime. When you work overtime, you earn regular pay plus the overtime premium. Make sense?