No Tax on Overtime in Illinois: What Qualifies and What Doesn't
The federal deduction works the same dollar math everywhere. What's genuinely different in Illinois is whether your overtime pay is the kind that qualifies, and whether Illinoisgives you any benefit on your state return too.
For most people this is the AGI on Form 1040, line 11.
$22.00/hr × 0.5 = $11.00 premium per OT hour × 240 hours = $2,640.00 qualified overtime.
Qualified overtime compensation (the premium portion only)
$2,640.00
Your deduction cap
$12,500.00
Your deduction
$2,640.00
Estimated federal tax saved
$580.80
FICA on your overtime (still withheld — not affected by this deduction)
$201.96
This is a deduction, not an exemption. Your employer still withheld income tax on this overtime during the year. The benefit shows up as a larger refund or smaller balance due when you file.
This is an estimate, not tax advice. Figures are based on published IRS guidance for tax years 2025–2028. Your actual deduction depends on your full return. Confirm with a tax professional or the IRS before filing. Nothing you enter here leaves your browser.
Reviewed by Saurabh Sharma and Ashay Saraswat · last verified August 31, 2026 against IRS guidance.
Does Illinois overtime qualify for the federal deduction?
Illinois has no daily-overtime statute. The One Day Rest in Seven Act (ODRISA) governs weekly rest days and 7th-day work permits, not overtime thresholds, and does not create a daily-overtime trigger. Effectively all overtime pay in Illinois is FLSA-required and qualifies for the federal deduction — though see the state-tax-conformity data for why Illinois requires an addback regardless.
Source: Illinois Department of Labor, One Day Rest In Seven Act (ODRISA) overview· verified 2026-08-31.
Does Illinois follow the federal deduction on your state return?
Illinois is generally a rolling-conformity state, which would otherwise have let the OBBBA overtime/tips deductions flow through automatically. Instead, Illinois Department of Revenue Informational Bulletin FY 2026-15 (December 2025) requires taxpayers to add back the federal overtime and tips deductions when computing Illinois base income — an affirmative opt-out, not a structural non-result like Pennsylvania's or New York's.
None. Overtime premium pay and tips are fully taxable on an Illinois return; the federal deduction must be added back.
Source: Illinois Department of Revenue, Informational Bulletin FY 2026-15, "What's New for Illinois Income Taxes" (December 2025)· last verified 2026-08-31. The bulletin's PDF could not be rendered for a verbatim quote during this verification pass; the addback requirement is corroborated by multiple independent SALT-advisory sources (BDO, and others) describing the same bulletin. Re-fetch and quote directly before this page ships if a verbatim citation is wanted on-page.
How overtime works in Illinois
- 1.5x regular rate for hours worked beyond 40 in a workweek. No daily overtime threshold.
What this is worth to a Illinois worker
Take a single filer earning the latest published national median hourly wage of $24.51/hr (a Illinois-specific median wasn't available from BLS's own site this session — this uses the national figure rather than guessing a state number), working 5 overtime hours a week for the full year (260 hours). The premium portion is 0.5 × $24.51 × 260 hours = $3,186.3 in qualified overtime.
At a $45,000 MAGI, single filer, well under the $150,000 phase-out threshold, the full $3,186.3 deduction applies (it's under the $12,500 cap too), saving an estimated $382.36 in federal tax.
On the Illinois state return: None. Overtime premium pay and tips are fully taxable on an Illinois return; the federal deduction must be added back.
Frequently asked questions
Does overtime in Illinois qualify for the federal no tax on overtime deduction?
Yes, effectively all of it. Illinois has no daily-overtime statute. The One Day Rest in Seven Act (ODRISA) governs weekly rest days and 7th-day work permits, not overtime thresholds, and does not create a daily-overtime trigger. Effectively all overtime pay in Illinois is FLSA-required and qualifies for the federal deduction — though see the state-tax-conformity data for why Illinois requires an addback regardless.
Does Illinois have its own state-level "no tax on overtime" deduction?
No. None. Overtime premium pay and tips are fully taxable on an Illinois return; the federal deduction must be added back.