OBBBA Overtime Tax Deduction Calculator
Calculate how much you can save under the One Big Beautiful Bill Act's new overtime tax deduction. Travel nurses working overtime can save up to $3,000 per year.
Why this matters: The OBBBA allows you to deduct the overtime "premium" (the 0.5x portion of time-and-a-half) from taxable income. Cap: $12,500/single, $25,000/MFJ.
OBBBA Overtime Tax Deduction Calculator
Calculate how much you can save under the One Big Beautiful Bill Act's overtime tax deduction.
Contract Details
Annual & Tax Info
Your OBBBA Deduction Estimate
Estimated Annual Tax Savings
$1,872
That's $624 per contract or $48/week
Total OT Hours/Year
312 hours
OT Premium (0.5x portion)
$25/hr
Total Eligible Premium
$7,800
Deduction (After Cap/Phase-out)
$7,800
Cap: $12,500
Income & Phase-Out Analysis
* This calculator estimates the OBBBA overtime tax deduction for the 2026 tax year. The deduction applies to the overtime "premium" (the 0.5x portion of time-and-a-half), not total overtime pay. This is a below-the-line deduction available regardless of whether you itemize. Consult a tax professional for personalized advice. Does not include tax-free stipends in MAGI.
How the OBBBA Overtime Deduction Works
What Qualifies as Overtime Premium?
Only the "premium" portion of overtime counts toward the deduction. For time-and-a-half pay:
- At $50/hr base, overtime pays $75/hr (1.5x)
- The premium is $25/hr (the 0.5x portion)
- Only the $25/hr premium is deductible, not the full $75/hr
Deduction Caps
The OBBBA caps the deduction at:
- Single/HoH: $12,500 maximum deduction
- Married Filing Jointly: $25,000 maximum deduction
Income Phase-Out
High earners see reduced deductions:
- Single: Phase-out starts at $150,000 MAGI, fully phased out at $275,000
- MFJ: Phase-out starts at $300,000 MAGI, fully phased out at $550,000
No Itemization Required
This is a below-the-line deduction. You can claim it whether you take the standard deduction or itemize.
Example Savings for Travel Nurses
| Scenario | Base Rate | OT Hours/Week | Annual OT Premium | Tax Savings (24%) |
|---|---|---|---|---|
| Light OT | $50/hr | 4 hrs | $3,900 | $936 |
| Moderate OT | $50/hr | 8 hrs | $7,800 | $1,872 |
| Heavy OT | $50/hr | 12 hrs | $11,700 | $2,808 |
| Max Deduction | $55/hr | 16+ hrs | $12,500 (cap) | $3,000 |
* Based on 39 working weeks/year (3 contracts × 13 weeks). Actual savings vary by your specific situation.
Frequently Asked Questions
What is the OBBBA overtime tax deduction?
The One Big Beautiful Bill Act (OBBBA) created a new federal tax deduction for overtime pay, effective 2026. Workers can deduct up to $12,500 of overtime premium from their taxable income. For married filing jointly, the cap is $25,000.
How much can I realistically save?
Most travel nurses working 8+ hours of overtime per week can save $1,500-$3,000 per year. The exact amount depends on your hourly rate, overtime hours, and tax bracket. Use the calculator above for your specific estimate.
Does this apply to travel nurse stipends?
No. The OBBBA deduction only applies to overtime pay on your taxable hourly wages. Tax-free stipends (housing, M&IE) are not affected by this deduction. However, overtime is calculated on your taxable hourly rate.
What if I earn over $150,000?
The deduction phases out for high earners. If your MAGI exceeds $150,000 (single) or $300,000 (MFJ), your deduction is reduced proportionally. It's fully phased out at $275,000 (single) or $550,000 (MFJ).
How do I claim this deduction?
The OBBBA deduction will be claimed on your federal tax return (Form 1040). Your employer should report overtime hours separately on your W-2 or provide documentation. Consult a tax professional for filing guidance.
Maximize Your Tax Savings
The OBBBA deduction is just one way to save. Use our full tax calculator to see how tax-free stipends and state taxes affect your take-home pay.
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