Tennessee Overtime Tax Deduction Calculator
Hourly workers in Tennessee.
The short answer: Run the pre-loaded scenario below: deduction $2,640, roughly $317 back in federal income tax at a 12% rate — $12 per biweekly paycheck. The math updates as you edit.
Regular rate (not OT rate)
Hours worked beyond 40/week
Modified Adjusted Gross Income
Overtime Premium Deduction
$2,640
✅ 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.
Tennessee Schedules and the 40-Hour Line
Tennessee has no state OT law and no state income tax — pure FLSA, pure federal deduction.
- • Tennessee relies entirely on the FLSA: 1.5× after 40 hours/week
- • No state income tax — the federal OBBBA deduction is the only OT tax relief
- • Nissan (Smyrna), GM (Spring Hill), and Memphis logistics (FedEx hub) drive OT
Worked Example
A single TN auto-plant worker at $22/hour with 240 OT hours — the exact numbers are editable.
- • Premium portion: $22 ÷ 2 = $11.00/hour on OT hours
- • Deduction: $2,640 (watch the cap and MAGI phase-out as you raise the inputs)
- • Federal income tax savings: $317 at the 12% marginal rate
Keep Reading
Frequently Asked Questions
Does Tennessee tax overtime?
No state income tax exists in Tennessee; the federal OBBBA premium deduction is what applies.
Auto-plant alternating schedules — count the OT weeks only?
Run your annual OT hours — the deduction uses actual premium dollars for the tax year.
Is the deduction on top of the standard deduction?
Yes. The overtime premium deduction is an above-the-line style deduction under the OBBBA rules for 2025-2028; it is not an either/or choice against your standard deduction.