Overtime pay is a reality for many households, but it also pushes taxable income higher. Beginning in 2025, the One Big Beautiful Bill Act allows taxpayers to deduct overtime pay—specifically, the “half-time” portion of overtime wages.
Deduction Limits
- Up to $12,500 for single filers
- Up to $25,000 for married couples filing jointly
Why It’s Important
This deduction rewards hard work. Families taking extra shifts to cover bills, save for PCS moves, or prepare for deployment expenses will see tax relief tied directly to their overtime effort.
Example
A military spouse earns $5,000 in overtime pay during the year. Under the new rules, a portion of that pay is deductible, lowering taxable income and resulting in meaningful tax savings.
Who Benefits Most
- Spouses working extra hours in civilian jobs.
- Families with fluctuating schedules that require overtime to make ends meet.
At PIM Tax Services, we’ll run the numbers to make sure your overtime is reported accurately and deducted correctly.