No Tax on Overtime

[DavzinSoCal]

Our W2 for 2025 does not show our eligible overtime. If you’re still an active employee you surely noticed the new YTD field increasing weekly for “Premium Worked Overtime”. That’s because we can deduct $12,500 off our taxable income and it’s retroactive starting January 2025. I’ve been waiting to go to HR Block in hopes that Ford will either update the W2 for 2025 or provide a seperate form. Of course I can tally it up myself but it’s not as simple as counting anything over 40 hours because they’re only using the “half” part of time-and-a-half. For example, I worked 54 hours which we all know is 14 hours of overtime but my YTD only increased by 7 hours. Double time however does actually count completely. Anyone in payroll reading this feel free to chime in   Lol

[Decker]

This is a deduction from your (AGI )adjusted gross income. In the event an employee earns an AGI above $150K the deduction is not applicable. Married filing jointly with an AGI above $300K the deduction is not applicable.

 

As for the gray area, W2`s. Some payroll departments are going to not change the W2 listings and will hand off the overtime calulation to the employee`s. This handoff would be in the form of an amendment form that would list the "half" - "0,5" paid. It will get interesting for those employee`s that can't grasp the "40" hour threshold. A four day - 10.7 hour schedule will generate a total OT of 2.8 hours eligible for the no tax calculation. That will be "Half" - "0.5" of the 2.8 hours of OT, the deduction will be the rate of tax on 1.4 hours of pay at the employees base hourly rate. Not a 1.4 hours rate of pay. At $30 an hour, the time an a half would be $45. The deduction would be the regular tax paid on $15. 

 

It will be a surprise to some who aren`t sure or aware of this deduction. One last thing "double" time is not part of the calculation.