Qualified Overtime Compensation (No Tax on Overtime)

Allows a deduction of up to $12,500 ($25,000 in the case of a joint return) of qualified overtime income received for the taxable year. The allowable deduction is reduced if the taxpayer's MAGI exceeds $150,000 ($300,000 in the case of a joint return). Qualified overtime compensation is defined as overtime paid to an individual whose occupation is covered by the Fair Labor Standards Act of 1938 (FLSA). Only the overtime amount which exceeds the regular rate of pay is eligible for the deduction.

No deduction allowed if taxpayer does not include a valid Social Security number on the return. If married, taxpayer must file a joint return to claim deduction. Deduction is allowed to non-itemizers.

Employers and other payers are required to file information returns with the IRS (or Social Security Administration) and furnish statements to taxpayers showing the total amount of qualified overtime compensation paid during the year.