Many workers who qualify for the No Tax on Overtime deduction under the One Big Beautiful Bill Act (OBBBA) struggle to find it in TurboTax. The interface isn't always obvious, and if you enter the wrong amount — or skip it entirely — you'll leave money on the table. This guide gives you the exact navigation path and what to type.
Before you open TurboTax, use our free overtime tax calculator to calculate your qualifying overtime premium (regular rate × 0.5 × annual FLSA overtime hours, capped at $12,500 single / $25,000 MFJ). You'll need that number during step 5 below.
Quick Answer
In TurboTax for tax year 2025, go to Federal > Deductions & Credits and search for "overtime deduction" or "Schedule 1-A" in the search bar at the top of the page. Alternatively, navigate to Other Tax Situations > Other Adjustments to Income and look for the OBBBA overtime deduction entry. Enter only your qualifying overtime premium amount — not your total overtime pay.
What Number to Enter
The number you enter is your qualified overtime compensation — the premium portion only. This equals your regular hourly rate × 0.5 × your annual FLSA overtime hours, subject to the cap and phase-out.
If your W-2 Box 14 shows a code like "OTP," "OT PREM," or "OBBBA," use that number directly. Starting with tax year 2026, employers are required to report this in Box 12 Code TT, making it automatic. For 2025, if your employer didn't report it, calculate it from your pay stubs per IRS Notice 2025-69. See our W-2 guide for details on finding the right number.
Step-by-Step TurboTax Walkthrough
- Sign in and open your 2025 return. Make sure you are working on the tax year 2025 return, not a prior year.
- Complete the Income section first. Enter all W-2 forms, including your regular wages and any overtime shown on the W-2. Don't worry about the deduction yet — enter total income as shown on your W-2.
- Navigate to Deductions & Credits. From the left menu, click "Federal" and then "Deductions & Credits."
- Use the search bar. At the top right of the Deductions & Credits page, type "overtime deduction" and press Enter. TurboTax should display a jump-to link for the OBBBA overtime or Schedule 1-A adjustment.
- Enter your qualified overtime premium. When the interview asks for your qualifying overtime compensation, enter the amount you calculated (regular rate × 0.5 × annual FLSA OT hours, capped and phase-out adjusted). This is NOT your total overtime pay.
- Confirm your filing status. TurboTax will verify your filing status. Remember: Married Filing Separately filers cannot claim this deduction. If you're MFJ, make sure you're filing jointly.
- Review the Schedule 1-A summary. TurboTax will show you the deduction applied to Schedule 1-A. Verify the amount is correct. It should match your calculated premium (or the cap if you exceeded $12,500/$25,000).
- Proceed to review and file. Continue through the review process. In the final summary, you should see the overtime deduction listed under "Adjustments to Income" reducing your AGI.
TurboTax Free Edition — Does It Support It?
Yes. The OBBBA overtime deduction is an above-the-line adjustment to income (Schedule 1-A), not an itemized deduction. TurboTax Free Edition supports all above-the-line adjustments, including the overtime deduction. You do not need to upgrade to Deluxe or Premium solely to claim this deduction.
If TurboTax prompts you to upgrade during the deduction entry process, look for an option to continue with the free version or enter the adjustment through the "Other Adjustments to Income" path instead.
What If TurboTax Doesn't Show the Field?
TurboTax updates its software throughout tax season. If you cannot locate a dedicated OBBBA overtime deduction field, use the alternative method:
- Navigate to Federal > Deductions & Credits > Other Deductions & Credits > Other Adjustments to Income.
- Add a new adjustment entry.
- In the description field, enter: "Qualified Overtime Compensation — IRC §225"
- Enter your calculated premium amount as the deduction value.
- TurboTax will place this on Schedule 1-A, Part II, which is the correct location.
This fallback method produces exactly the same tax result as the dedicated field, because the underlying form is the same.
Other Tax Software Guides
If you use a different platform, the process is similar but the navigation differs:
- FreeTaxUSA: Deductions > Adjustments to Income > "Overtime Compensation Deduction (OBBBA)." FreeTaxUSA is free for federal returns and directly supports the deduction.
- TaxSlayer: Federal Section > Adjustments > "Other Adjustments" > "Qualified Overtime Compensation."
- H&R Block: Federal > Deductions and find the overtime deduction interview, or under "Other Adjustments to Income."
- IRS Free File: If you qualify (income under $84,000), use a Free File provider — all participating providers support above-the-line adjustments including the overtime deduction.
For a full overview of the filing process on all platforms, see our Form 1040 filing guide.
Calculate Your Deduction Amount First
Know the exact number before you open TurboTax. Our free calculator handles the formula, cap, and phase-out automatically.
Calculate My Premium →Frequently Asked Questions
Does TurboTax calculate the overtime deduction automatically from my W-2?
Only if your employer reported the overtime premium in W-2 Box 14 with a recognized code or in Box 12 Code TT (mandatory starting with TY 2026). In that case, TurboTax may import the value automatically during W-2 entry. For TY 2025, most employers did not report it (reporting was voluntary), so you'll likely need to enter it manually in the Deductions & Credits section.
Do I need TurboTax Deluxe to claim the overtime deduction?
No. The OBBBA overtime deduction is an above-the-line adjustment (Schedule 1-A), which TurboTax Free Edition fully supports. You only need Deluxe if you also want to claim itemized deductions like mortgage interest or charitable contributions. For the overtime deduction alone, Free Edition is sufficient.
I already filed my 2025 return without claiming the overtime deduction. What do I do?
File an amended return using Form 1040-X. In TurboTax, open your previously e-filed return and select "Amend (Change) Return." Navigate to the overtime deduction section, add the amount, and resubmit. You have 3 years from the original filing deadline to claim a refund via amendment. The IRS typically processes amended returns within 16 weeks.
Can TurboTax handle the OBBBA phase-out calculation automatically?
Yes. If you accurately enter your income throughout the return, TurboTax will automatically apply the phase-out rules based on your MAGI. The deduction phases out at $100 per $1,000 above $150,000 (single) or $300,000 (MFJ) and is fully eliminated at $275,000 / $550,000 respectively. You can verify the phase-out calculation in the Forms view under Schedule 1-A.
Where does the overtime deduction appear in the TurboTax final summary?
In TurboTax's review summary, the overtime deduction appears under "Adjustments to Income" on the Schedule 1 Part II section. It flows to Form 1040 Line 10 ("Other Adjustments") and reduces your AGI on Line 11. In the Federal Tax Summary view, you'll see your total income reduced by the deduction before the standard deduction is applied.