Beginning with the 2025 tax year, eligible taxpayers who earn overtime compensation may qualify for a new temporary federal tax deduction. The No Tax on Overtime deduction  allows individuals to deduct the portion of overtime pay that exceeds their regular hourly rate. This deduction is available for tax years 2025 through 2028 . The maximum annual deduction is $12,500 for single filers  and $25,000 for married couples filing jointly , subject to income limitations. It is imp