Schedule1ADesk / 2026 Tax & Payroll Guides / Who Qualifies for No Tax on Overtime in 2026? (FLSA Non-Exempt Eligibility Checklist)
Who Qualifies for No Tax on Overtime in 2026? (FLSA Non-Exempt Eligibility Checklist)
Who is eligible for the 2026 No Tax on Overtime deduction?
You qualify if you are a W-2 employee covered by the Fair Labor Standards Act (FLSA) who is non-exempt and earns FLSA-mandated overtime pay for working more than 40 hours in a workweek (or applicable 207(k) public safety thresholds). Your Modified AGI must be under $275,000 Single ($550,000 Married Filing Jointly, where the phase-out completes), and married taxpayers must file a joint return.
You qualify if you are a W-2 employee covered by the Fair Labor Standards Act (FLSA) who is non-exempt and earns FLSA-mandated overtime pay for working more than 40 hours in a workweek (or applicable 207(k) public safety thresholds). Your Modified AGI must be under $275,000 Single ($550,000 Married Filing Jointly, where the phase-out completes), and married taxpayers must file a joint return.
Open Interactive 2026 Schedule 1-A & W-2 Box 12 Calculator
2026 Form W-2 Box 12 & Schedule 1-A Reference Table
| W-2 Box / IRS Schedule | 2026 Reporting & Deduction Rule |
|---|---|
| Box 12 Code TT (New for 2026) | Qualified FLSA 0.5x Overtime Premium · Deduct up to $12,500 Single / $25,000 MFJ on Schedule 1-A Part III |
| Box 12 Code TP + Box 14b TTOC (New for 2026) | Qualified Voluntary Tips in 75 TTOC Occupations · Deduct up to $25,000 on Schedule 1-A Part II |
| Box 12 Code D / S / E / G | Pre-tax 401(k), SIMPLE IRA, 403(b), and 457(b) deferrals · Lowers MAGI to prevent Schedule 1-A phase-out |
| Box 12 Code W | Employer + Employee pre-tax HSA contributions · Excluded from Box 1 wages and lowers MAGI |
| Box 12 Code DD | Informational cost of employer-sponsored health coverage · Non-taxable |
| Form 1098-VLI (Schedule 1-A Part IV) | Up to $10,000 deduction for interest on new U.S.-assembled passenger vehicles (VIN starts with 1, 4, 5, or 7) |
| Schedule 1-A Part V (Age 65+ Bonus) | $6,000 per spouse age 65+ ($12,000 joint) · Phases out above $75,000 Single / $150,000 MFJ |
Frequently Asked Questions
Who is eligible for the 2026 No Tax on Overtime deduction?
You qualify if you are a W-2 employee covered by the Fair Labor Standards Act (FLSA) who is non-exempt and earns FLSA-mandated overtime pay for working more than 40 hours in a workweek (or applicable 207(k) public safety thresholds). Your Modified AGI must be under $275,000 Single ($550,000 Married Filing Jointly, where the phase-out completes), and married taxpayers must file a joint return.
Do I have to itemize deductions to claim W-2 Box 12 Code TT or Code TP?
No. All four deductions on 2026 IRS Schedule 1-A (Qualified Tips, Qualified Overtime, Auto Loan Interest, and the $6,000 Senior Deduction) are above-the-line deductions available to both Standard Deduction and Itemized filers.