IRS Issues Overtime Compensation Fact Sheet
The Internal Revenue Service (IRS) issued a Fact Sheet providing updates to frequently asked questions regarding qualified overtime compensation.
As a reminder, effective 2025 through 2028, non-exempt employees may deduct the “half” portion of their time-and-a-half overtime pay on their federal tax returns.
Some of the updates include the following:
- Clarification on the limits and timing of the qualified overtime compensation deduction
- Additional information on coverage and exemptions under the Fair Labor Standards Act (FLSA)
- Additional information on federal income tax withholding procedures
Previously, Forms W-2 and 1099 did not have dedicated boxes for indicating qualified overtime. However, an employer must now report the amount separately. Specific guidance can be found in the Fact Sheet under Topic E: Information for employers.
Please refer to IRS Fact Sheet FS-2026-13 for a full list of new and updated questions and answers.
Danielle Hinson
Danielle Hinson joined the HR Services team as an HR and compensation consultant in 2025. Hinson assists with compensation planning and development, training, and other HR projects. She has 12 years of experience in human resources in public education. Most recently, she was the director of human resources for a Texas public school district.
Hinson holds a bachelor’s degree in business administration and marketing from Houston Christian University.
HR Services
Subscribe to HRX
Stay up to date with all the latest HR news and trends by joining the HRX mailing list!