§225 — Title 26 Internal Revenue Code | U.S. Code

Summary

You can deduct overtime pay you received during the year if it is shown on the pay statements given to you. The deduction is limited to $12,500 per person, or $25,000 for married couples filing a joint return. The deduction is reduced by $100 for every $1,000 your modified adjusted gross income is over $150,000 ($300,000 for joint filers). Modified adjusted gross income means your adjusted gross income plus amounts excluded under sections 911, 931, or 933. Qualified overtime pay means overtime required under the Fair Labor Standards Act that is above your regular pay rate; tips do not count. You must list the worker’s Social Security number on the tax return to claim it. Married people must file jointly to use the deduction. The Treasury must issue rules to implement and prevent abuse of the deduction. The deduction is not allowed for tax years beginning after December 31, 2028.

Title 26, §225

Internal Revenue Code — Source: USLM XML via OLRC

(a)There shall be allowed as a deduction an amount equal to the qualified overtime compensation received during the taxable year and included on statements furnished to the individual pursuant to section 6041(d)(4) or 6051(a)(19).

(b)(1)The amount allowed as a deduction under this section for any taxable year shall not exceed $12,500 ($25,000 in the case of a joint return).

(2)(A)The amount allowable as a deduction under subsection (a) (after application of paragraph (1)) shall be reduced (but not below zero) by $100 for each $1,000 by which the taxpayer’s modified adjusted gross income exceeds $150,000 ($300,000 in the case of a joint return).

(B)For purposes of this paragraph, the term “modified adjusted gross income” means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section 911, 931, or 933.

(c)(1)For purposes of this section, the term “qualified overtime compensation” means overtime compensation paid to an individual required under section 7 of the Fair Labor Standards Act of 1938 that is in excess of the regular rate (as used in such section) at which such individual is employed.

(2)Such term shall not include any qualified tip (as defined in section 224(d)).

(d)(1)No deduction shall be allowed under this section unless the taxpayer includes on the return of tax for the taxable year such individual’s social security number.

(2)For purposes of paragraph (1), the term “social security number” shall have the meaning given such term in section 24(h)(7).

(e)If the taxpayer is a married individual (within the meaning of section 7703), this section shall apply only if the taxpayer and the taxpayer’s spouse file a joint return for the taxable year.

(f)The Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section, including regulations or other guidance to prevent abuse of the deduction allowed by this section.

(g)No deduction shall be allowed under this section for any taxable year beginning after December 31, 2028.

Notes & Related Subsidiaries

Editorial Notes

References in Text

section 7 of the Fair Labor Standards Act of 1938, referred to in subsec. (c)(1), is classified to section 207 of Title 29, Labor.

Prior Provisions

A prior section 225 was renumbered section 226 of this title.

Statutory Notes and Related Subsidiaries

Effective Date

Section applicable to taxable years beginning after Dec. 31, 2024, see section 70202(g) of Pub. L. 119–21, set out as an

Effective Date

of 2025 Amendment note under section 63 of this title.

§225 Qualified overtime compensation

Summary

Title 26, §225

Notes & Related Subsidiaries

Editorial Notes

References in Text

Prior Provisions

Statutory Notes and Related Subsidiaries

Effective Date

Effective Date

Citations & Metadata