… But You Can Deduct This One Part
2025 brought a brand-new tax break that everyone is confused about: the overtime deduction on Schedule 1-A. And honestly? The confusion makes sense. Payroll systems updated overnight, Box 14 codes changed, and suddenly everyone thinks their entire overtime check is deductible.Let’s clear that up.
What the IRS allows
You can only deduct overtime premium.
This is the extra half-rate your employer pays when you cross over the 40-hour
threshold.
Example: If you made $4,000 in overtime last year, your pay stub might show the full $4,000. However, your W-2, Box 14 might show something like $1,200.
That $1,200 is the overtime premium.
That’s the part you can deduct.
Why your pay stub doesn’t match your W-2
Your pay stub shows:
- Only overtime hours
- Total overtime pay (1.5 x rate)
Your W-2 Box 14 shows:
- Only the premium portion (0.5 x rate)
They will never match. They are not supposed to.
Where to put it
Schedule 1-A, Part III, Line 14a
Type the Box 14 number exactly as printed.
