Construction Worker Overtime Tax Deduction Calculator
Run your real overtime numbers below. The estimate applies the same Schedule 1-A math as your federal return — no tax software, no signup.
The short answer: Ray — at the scenario numbers pre-loaded below, the OBBBA deduction is $6,720, worth about $1,478 in federal income tax at a 22% marginal rate ($57 per biweekly paycheck). Exact figures update live as you change the inputs.
Regular rate (not OT rate)
Hours worked beyond 40/week
Modified Adjusted Gross Income
Overtime Premium Deduction
$6,720
✅ You qualify for the full deduction
⚠️ This calculator provides estimates for informational and educational purposes only. It is not tax advice. Results are based on the One Big Beautiful Bill Act (OBBBA) and IRS Schedule 1-A. Consult a qualified tax professional for your specific situation.
What Counts (and What Doesn't)
Prevailing-wage public jobs often pay overtime at time-and-a-half of a blended rate — your deductible premium is still the half-time portion above the regular rate. Per-diem allowances for out-of-town work are separate: they are not wages and not part of either the premium or MAGI if they fall under accountable-plan rules.
The full rules, caps and phase-outs for every deduction are in one table on the OBBBA rules page.
Worked Example
Ray frames commercial buildings at $28/hour and logs close to 480 overtime hours during the long-season push, tapering in winter.
- • Deductible amount: $6,720
- • Federal income tax savings: $1,478 (at the 22% marginal rate)
- • Per biweekly paycheck: $57
Every dollar of that comes off federal income tax while FICA still applies — the calculator above runs the same caps and phase-outs your return will.
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Frequently Asked Questions
Does prevailing wage overtime count for the deduction?
Yes. The deduction is based on overtime premium pay on your W-2, and prevailing-wage jobs still pay that premium — often on a higher blended regular rate, which raises the deductible amount. Per-diem travel allowances are separate and are not counted.
Do I need to itemize deductions to claim the overtime deduction?
No. The overtime premium deduction is an above-the-line adjustment on Schedule 1-A — you can take the standard deduction and still claim it in full.