3d • 💼 Tax Industry Talk
New 2025-2028 Overtime Pay Deduction: What Taxpayers Need to Know
A major update just reshaped the landscape for millions of U.S. workers - and tax professionals need to be ready. The Big Beautiful Bill Act, signed on July 4, 2025, introduces a brand-new temporary deduction that allows eligible taxpayers to exclude up to $12,500 ($25,000 MFJ) of qualified overtime pay from taxable income from 2025 through 2028.
Below is a quick breakdown to help you stay ahead of the changes and guide your clients with confidence.
🆕 What the New Overtime Deduction Offers
For tax years 2025–2028, eligible individuals can deduct:
- $12,500 for Single, HOH, or MFS
- $25,000 for Married Filing Jointly
This applies only to the premium portion of overtime pay - not the entire OT wage.
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New 2025-2028 Overtime Pay Deduction: What Taxpayers Need to Know
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