No Tax on Overtime in Texas: What Qualifies and What Doesn't
The federal deduction works the same dollar math everywhere. What's genuinely different in Texas is whether your overtime pay is the kind that qualifies, and whether Texasgives 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 Texas overtime qualify for the federal deduction?
Texas has no state overtime statute; the Texas Minimum Wage Act defers entirely to the FLSA. Effectively all overtime pay in Texas is FLSA-required and qualifies for the federal deduction (subject to the deduction's own caps/phase-out).
Source: Texas Workforce Commission; Texas Minimum Wage Act (Tex. Lab. Code ch. 62), which incorporates the FLSA by reference· verified 2026-08-31.
Does Texas follow the federal deduction on your state return?
Texas levies no personal wage income tax at all, so there's no state return, and no state-conformity question to answer. The federal deduction described above is the entire benefit — nothing is added back, and nothing extra is available on top of it either.
How overtime works in Texas
- 1.5x regular rate for hours worked beyond 40 in a workweek. No daily overtime threshold.
What this is worth to a Texas worker
Take a single filer earning the latest published national median hourly wage of $24.51/hr (a Texas-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.
Frequently asked questions
Does overtime in Texas qualify for the federal no tax on overtime deduction?
Yes, effectively all of it. Texas has no state overtime statute; the Texas Minimum Wage Act defers entirely to the FLSA. Effectively all overtime pay in Texas is FLSA-required and qualifies for the federal deduction (subject to the deduction's own caps/phase-out).
Does Texas have its own state-level "no tax on overtime" deduction?
Texas has no state wage income tax at all, so there's no separate state deduction to claim or forgo — the federal deduction is the only one that applies.