Fact check: Is all my overtime deductible at the end of the year?

1. Summary of the results

The original statement "Is all my overtime deductible at the end of the year?" can be answered with a partial yes, but with significant limitations and thresholds. According to ^[1], individuals who receive qualified overtime compensation may deduct the pay that exceeds their regular rate of pay, up to $12,500 ($25,000 for joint filers) ^[1]. This is further supported by ^[2], which states that individuals may deduct up to $12,500 ($25,000 if married filing jointly) of qualified overtime compensation, which is overtime compensation that exceeds their regular rate of pay ^[2]. However, not all overtime pay is deductible, as stated by ^[3], which contradicts the claim that all overtime pay will be tax-free ^[3]. The One Big Beautiful Bill Act introduces a federal income tax exemption on a designated amount of qualifying overtime pay, with a maximum annual deduction of $12,500 for single filers and $25,000 for joint filers, phasing out for taxpayers with modified adjusted gross income over $150,000 for single filers and $300,000 for joint filers, as explained by ^{[4] [4]} and ^{[1] [1]}.

2. Missing context/alternative viewpoints

A key point missing from the original statement is the definition of qualified overtime compensation and the income thresholds that apply to the deduction. As explained by ^[5], the One Big Beautiful Bill Act contains new, temporary laws, including available tax deductions for earnings on tips for tipped employees and overtime wage earnings of all employees, but with certain limitations and thresholds ^[5]. Additionally, the phase-out of the deduction for taxpayers with modified adjusted gross income over $150,000 for single filers and $300,000 for joint filers is an important context, as mentioned by ^{[1] [1]} and ^{[1] [1]}. The timeframe for which the No Tax on Overtime provision applies, starting January 1, 2025, and continuing through December 31, 2028, is also a crucial piece of information, as stated by ^{[6] [6]}.

3. Potential misinformation/bias in the original statement

The original statement may be considered misleading, as it implies that all overtime pay is deductible, which is not the case, as stated by ^{[3] [3]}. The lack of context regarding the income thresholds, phase-out of the deduction, and timeframe for the No Tax on Overtime provision may lead to confusion among individuals who receive overtime compensation. The beneficiaries of the correct information include individuals who receive qualified overtime compensation, as they may be able to deduct a portion of their overtime pay, up to $12,500 ($25,000 for joint filers), as explained by ^{[1] [1]} and ^{[2] [2]}. On the other hand, taxpayers with modified adjusted gross income over $150,000 for single filers and $300,000 for joint filers may be disadvantaged by the phase-out of the deduction, as mentioned by ^{[1] [1]} and ^{[1] [1]}.