Schedule1ADesk / 2026 Tax & Payroll Guides / Union CBA Contractual Overtime vs. Federal FLSA W-2 Box 12 Code TT Rule
Union CBA Contractual Overtime vs. Federal FLSA W-2 Box 12 Code TT Rule
How much is the 2026 overtime tax deduction for Union Tradesperson (CBA Contract Overtime)?
At $40/hour working 10 FLSA overtime hours per week for 50 weeks, your gross 1.5x overtime pay is $30,000, and your qualified 0.5x half-time overtime premium (reported in 2026 Form W-2 Box 12, Code TT) is $10,000, saving roughly $2,200 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 $40/hr (10 OT Hrs/Wk) Schedule 1-A PDF Worksheet
2026 Paystub-to-W-2 Box 12 Code TT Breakdown (Union Tradesperson (CBA Contract Overtime))
| Overtime Pay Component | Weekly Amount (10 OT Hrs) | Annual Amount (50 Weeks) | 2026 Tax Treatment |
|---|---|---|---|
| Regular Base Rate (1.0x Straight-Time Portion) | $400 ($40/hr x 10h) | $20,000 | Taxed as normal W-2 Box 1 wages (Excluded from Code TT) |
| FLSA Half-Time Premium (0.5x Multiplier) | $200 ($20.00/hr x 10h) | $10,000 | Reported in W-2 Box 12 Code TT · Deductible on Schedule 1-A |
| Total Time-and-a-Half Overtime Pay (1.5x) | $600 ($60.00/hr x 10h) | $30,000 | Subject to normal 7.65% FICA (Social Security & Medicare) |
| Allowed Schedule 1-A Part III Deduction | N/A | $10,000 (Single Cap $12,500 / MFJ $25,000) | Saves ~$2,200/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 $40/hour?
Because the federal FLSA overtime deduction only exempts the 0.5x half-time premium ($20.00/hr) above your regular $40/hr base wage, which equals exactly one-third of your $60.00/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.