How to Claim No Tax on Overtime on Schedule 1-A

Schedule 1-A is a brand new IRS form for the 2025 tax year, created specifically to handle several of the OBBBA's new above-the-line deductions in one place: no tax on overtime, no tax on tips, an extra deduction for seniors, and the car loan interest deduction. It's separate from the long-standing Schedule 1 used for other income adjustments, the "1-A" is its own dedicated form. Because it's above the line, it reduces your income before the standard deduction or itemizing even comes into play, so you don't have to choose between claiming this deduction and taking the standard deduction.

If more than one OBBBA deduction applies to you, say you earned both qualified overtime and reportable tip income, they're both calculated on the same Schedule 1-A and combined into a single total that flows to your 1040.

1. Find your qualified overtime compensation. Check box 14 of your W-2 for code TT. Employers are required to report this figure separately starting with 2025 W-2s, it's already the "premium" portion of your overtime pay, not your full overtime paycheck, so you don't need to recalculate it yourself.
2. Confirm your filing status and MAGI. Your modified adjusted gross income and whether you're single, head of household, or married filing jointly determine both your deduction cap ($12,500 or $25,000) and whether the phase-out applies at all.
3. Work through the phase-out worksheet if it applies. If your MAGI is above $150,000 (single/HoH) or $300,000 (joint), Schedule 1-A includes a worksheet that reduces your cap by $100 for every $1,000 of MAGI over the threshold, reaching $0 at $275,000 or $550,000. Below those starting thresholds, skip this step, your full qualified overtime is deductible up to the cap.
4. Enter the result and file. The final deduction amount from Schedule 1-A carries over to your Form 1040, reducing your taxable income before your tax liability is calculated. You don't report anything overtime-related directly on the 1040 form itself, it all routes through Schedule 1-A first.

Want to see the number before you sit down to file? Run your W-2 code TT amount, or your hourly rate and overtime hours, throughthe no tax on overtime calculator, which applies this exact same phase-out formula.

If you ever need to sanity-check the box 14 figure yourself, the underlying formula is straightforward: qualified overtime is your overtime hourly rate minus your regular hourly rate, multiplied by your overtime hours. For a standard time-and-a-half schedule, that's just half your regular rate times your overtime hours, since the "extra" half is the only part that counts. It's the same overtime calculation formula used throughout the rest of this site's tools, including theovertime premium calculatorif you want to isolate just the premium dollar amount from your pay stubs.

TurboTax, H&R Block, and other major filing software have built support for Schedule 1-A into their 2025 filing flow. In practice, this usually means you enter your W-2 as normal, the software reads the code TT amount from box 14, and it fills out Schedule 1-A and the phase-out worksheet automatically based on the filing status and income you've already entered elsewhere in your return. You generally won't see the form itself unless you specifically look for it in the forms view.

If you're filing a paper return or using free-file software that hasn't caught up yet, the IRS publishes the Schedule 1-A form and its instructions directly, and the four steps above match what the form itself walks you through line by line.

This is general information, not tax advice. Confirm the current-year Schedule 1-A instructions and your own numbers with the IRS or a tax professional before filing. Every calculator linked from this page runs entirely in your browser.