Schedule1ADesk / 2026 Tax & Payroll Guides / How Night Shift Differentials & Nondiscretionary Bonuses Increase W-2 Code TT
How Night Shift Differentials & Nondiscretionary Bonuses Increase W-2 Code TT
How much is the 2026 overtime tax deduction for Shift-Differential Manufacturing Worker?
At $30/hour working 10 FLSA overtime hours per week for 50 weeks, your gross 1.5x overtime pay is $22,500, and your qualified 0.5x half-time overtime premium (reported in 2026 Form W-2 Box 12, Code TT) is $7,500, saving roughly $1,650 in federal tax.
Under Public Law 119-21 (IRS Schedule 1-A, Part III), the 2026 "No Tax on Overtime" deduction applies strictly to the FLSA-required 0.5x half-time premium portion of time-and-a-half pay for hours worked over 40 in a workweek. For 2026, your employer must report this exact 0.5x amount in Form W-2, Box 12, Code TT.
Open Pre-Filled $30/hr (10 OT Hrs/Wk) Schedule 1-A PDF Worksheet
2026 Paystub-to-W-2 Box 12 Code TT Breakdown (Shift-Differential Manufacturing Worker)
| Overtime Pay Component | Weekly Amount (10 OT Hrs) | Annual Amount (50 Weeks) | 2026 Tax Treatment |
|---|---|---|---|
| Regular Base Rate (1.0x Straight-Time Portion) | $300 ($30/hr x 10h) | $15,000 | Taxed as normal W-2 Box 1 wages (Excluded from Code TT) |
| FLSA Half-Time Premium (0.5x Multiplier) | $150 ($15.00/hr x 10h) | $7,500 | Reported in W-2 Box 12 Code TT · Deductible on Schedule 1-A |
| Total Time-and-a-Half Overtime Pay (1.5x) | $450 ($45.00/hr x 10h) | $22,500 | Subject to normal 7.65% FICA (Social Security & Medicare) |
| Allowed Schedule 1-A Part III Deduction | N/A | $7,500 (Single Cap $12,500 / MFJ $25,000) | Saves ~$1,650/yr in the 22% federal bracket |
Frequently Asked Questions
Why is my W-2 Box 12 Code TT only one-third of my total 1.5x overtime pay at $30/hour?
Because the federal FLSA overtime deduction only exempts the 0.5x half-time premium ($15.00/hr) above your regular $30/hr base wage, which equals exactly one-third of your $45.00/hr time-and-a-half pay.
What is the maximum 2026 Schedule 1-A overtime deduction cap?
The maximum deduction is $12,500 for Single and Head of Household filers, and $25,000 for Married Filing Jointly, phasing out above $150,000 ($300,000 MFJ) MAGI.