No tax on overtime (2025–2028)

The rule (settled)

For 2025–2028, you can deduct the FLSA-required premium part of overtime pay. That's the "half" of time-and-a-half: up to 0.5 × your FLSA regular rate per overtime hour.
Cap: $12,500 ($25,000 married filing jointly).
Phase-out: the deduction drops by $100 for each full $1,000 of modified AGI over $150,000 ($300,000 MFJ). Based on Schedule 1-A (2025); re-check the 2026 form.
You can take it whether or not you itemize. Married couples must file jointly, and you need a valid SSN.
Overtime is still subject to Social Security and Medicare.
From 2026, employers report it on W-2 box 12, code TT, and you may use only that amount, or a W-2c (FS-2026-13 Q19–Q22).

Hours over 40 in a workweek, or your hospital's FLSA 8/80 overtime. With 8/80, use the premium actually paid under that system (FS-2026-13 Q17).
Not counted: overtime that only your contract, policy, or union agreement requires, beyond what the FLSA requires. Examples are double time (only the half counts, FS-2026-13 Q16) and holiday premiums.
Your regular rate includes most shift differentials and non-discretionary bonuses (FS-2026-13 Q15; DOL #56A).

Log overtime weekly.
In January, compare your log with code TT. If code TT is low, ask for a W-2c.
2025: check whether you claimed it. If not, consider amending with Form 1040-X (generally within 3 years). There was no code TT for 2025; Notice 2025-69 explains the self-calculation methods.

Overtime paid only because of a contract, CBA, or employer policy (e.g., daily overtime over 8 or 12 hours that the FLSA doesn't require, double time beyond 1.5×, holiday premiums) is not qualified. If the employer pays 2×, only the 0.5× needed to satisfy the FLSA qualifies. (FS-2026-13 Q1/A1, Q16)
Independent contractors generally don't get FLSA overtime, so there's no deduction unless they are an FLSA employee misclassified for tax purposes ("rare"). (FS-2026-13 Q7)
Hourly RNs are generally FLSA overtime-eligible. (DOL Fact Sheet #17N)