How to read your W-2 and pay stub for the overtime deduction

The calculator estimates your qualified overtime premium from your rate and hours. When your official documents arrive, you can confirm the figure rather than relying on the estimate. This guide shows where to look.

Start with your pay stub

Most pay stubs break earnings into lines such as regular, overtime, and sometimes a separate premium line. Your regular line shows base-rate hours. Your overtime line usually shows overtime hours paid at one and a half times. The qualified amount for the deduction is only the premium half of that overtime line, which is the overtime pay minus what those same hours would have earned at your regular rate. If your stub shows a distinct overtime-premium figure, that is the number you want.

Reconcile hours and rate

To check the calculator, take your regular hourly rate and multiply half of it by your total overtime hours for the year. That product should match the premium the calculator reports for the same inputs, and it should be close to the year-to-date overtime premium on your final pay stub. Small differences can come from rate changes during the year or from weeks where overtime was computed on a blended rate.

What your W-2 shows

For 2025 and later, qualified overtime is being reported so the premium can flow to your return, generally through your Form W-2 or an accompanying statement. Keep the W-2 with your final pay stub. When you file, the reported premium is the starting figure, and the cap and income phaseout are applied on top of it. The deduction you can claim is the smaller of your premium and your applicable cap.

If the numbers do not match

If the premium on your forms differs noticeably from your own calculation, do not simply override it. Ask your employer or payroll department how the overtime premium was computed, since they are the source of the reported figure. Use the calculator to understand the expected range, then rely on the official, reconciled number when you file.

This guide is general information, not tax advice. Your forms and a qualified professional are the authority for your return.