No Tax on Overtime in Pennsylvania: What Qualifies and What Doesn't
The federal deduction works the same dollar math everywhere. What's genuinely different in Pennsylvania is whether your overtime pay is the kind that qualifies, and whether Pennsylvaniagives 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 Pennsylvania overtime qualify for the federal deduction?
Pennsylvania's Minimum Wage Act sets the same 40-hour weekly threshold as the FLSA, with no daily-hours trigger. Effectively all overtime pay in Pennsylvania is FLSA-required and qualifies for the federal deduction — though see the state-tax-conformity data for why the deduction has no Pennsylvania state-tax benefit regardless.
Source: Pennsylvania Department of Labor & Industry, Wage FAQs· verified 2026-08-31.
Does Pennsylvania follow the federal deduction on your state return?
Pennsylvania's personal income tax does not start from federal AGI or federal taxable income at all — it taxes eight enumerated classes of income (including 'compensation,' which covers wages, salary, and tips) under its own flat 3.07% rate, with none of the federal deductions, exemptions, or AGI-based adjustments that other states inherit. There is no 'conformity question' to resolve here: Pennsylvania was never going to pick up a federal deduction it doesn't structurally reference in the first place.
None, and not because of a decoupling decision — Pennsylvania's tax base doesn't work that way for any federal deduction, OBBBA included.
Source: Pennsylvania Department of Revenue, Personal Income Tax Guide — Deductions and Credits· last verified 2026-08-31.
How overtime works in Pennsylvania
- 1.5x regular rate for hours worked beyond 40 in a workweek. No daily overtime threshold.
What this is worth to a Pennsylvania worker
Take a single filer earning the latest published national median hourly wage of $24.51/hr (a Pennsylvania-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 Pennsylvania state return: None, and not because of a decoupling decision — Pennsylvania's tax base doesn't work that way for any federal deduction, OBBBA included.
Frequently asked questions
Does overtime in Pennsylvania qualify for the federal no tax on overtime deduction?
Yes, effectively all of it. Pennsylvania's Minimum Wage Act sets the same 40-hour weekly threshold as the FLSA, with no daily-hours trigger. Effectively all overtime pay in Pennsylvania is FLSA-required and qualifies for the federal deduction — though see the state-tax-conformity data for why the deduction has no Pennsylvania state-tax benefit regardless.
Does Pennsylvania have its own state-level "no tax on overtime" deduction?
No. None, and not because of a decoupling decision — Pennsylvania's tax base doesn't work that way for any federal deduction, OBBBA included.