The One Big Beautiful Bill Act introduces an exciting opportunity for taxpayers from 2025 to 2028, allowing for a deduction of up to $12,500 for single filers and $25,000 for those married filing jointly on qualified overtime compensation. It’s important to note that this deduction comes with a phase-out threshold, kicking in when modified adjusted gross income surpasses $150,000 for singles and $300,000 for joint filers. Qualified overtime refers to any hours worked that exceed the standard rate, as outlined in Section 7 of the Fair Labor Standards Act. Remember, all qualified overtime must be clearly documented on the employee’s W-2 to ensure compliance and maximize your benefits.
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