Qualified Overtime Compensation for Tax Year 2025
If you are receiving this email, our records indicate you received overtime compensation and may be eligible for a deduction on your 2025 tax return. Please contact your tax consultant to determine eligibility.
Employers are not required to report qualified overtime compensation premiums separately for tax year 2025, therefore, you may use your last 2025 pay stub to calculate this amount.
For tax year 2025, an employee may use one of the methods described in IRS Notice 2025-69 to estimate their qualified overtime compensation premium. For example, one method is to use one-third of the aggregate dollar amount of qualified overtime compensation. Your last 2025 paystub will list overtime compensation in a column labeled “YTD” using one or both of the following earning descriptions:
Overtime at Time and a Half
Orientation OT a 1.5
*Please note that there may be multiple lines for each earning description.
Example: The paystub YTD amount is $4,575.00. The calculated qualified overtime compensation premium (YTD amount divided by 3) = $1,525.00.
| Earnings | YTD | One-Third |
|---|---|---|
| Overtime at Time and a Half | $ 1,500.00 | $ 500.00 |
| Overtime at Time and a Half | $ 3,000.00 | $ 1,000.00 |
| Orientation OT a 1.5 | $ 75.00 | $ 25.00 |
| Total | $ 4,575.00 | $ 1,525.00 |