Does a holiday premium count?
Not by itself. Qualified overtime is the FLSA premium for hours over 40. Extra pay for working a holiday, when the FLSA did not require it, stays out of the deduction.
Qualified overtime compensation
Qualified overtime is the extra half on FLSA overtime, not the whole check. Exempt employees, and premiums a contract pays when the FLSA did not require overtime, do not qualify. Forty-six hours of non-exempt FLSA overtime is 6 hours.
Hours that can qualify
6.0 hours
6 hours can qualify.
Qualified overtime is the FLSA half on hours over 40. A holiday premium is not included.
Breakdown
| Hours over 40 that can qualify | 6.0 hours |
|---|
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Qualifying hours = hours over 40, and only if the work is non-exempt and the premium is FLSA-required.
The three gates
The worker has to be covered by the FLSA overtime rule. An exempt executive, administrative, or professional employee does not earn this premium. Salaried is not the same word as exempt. A salaried non-exempt worker can still have qualified overtime.
The premium has to be the one the FLSA requires for hours over 40 in the workweek. A holiday premium, a Sunday premium, or double time that only a contract requires is not qualified overtime by itself. This page does not compute a fluctuating workweek or a hospital 8-and-80 schedule.
Worked examples
| Hours that can qualify | 6 |
|---|
Common questions
I am salaried. Can I still qualify?
Yes if the salary is non-exempt. The exempt question is about the FLSA duties test, not about whether you receive a salary. If you are exempt, the hours are zero here.
Is the deductible amount these hours times my rate?
No. The deduction is those hours times half the regular rate, then the annual cap and the phase-out. Use the no-tax-on-overtime calculator for the dollar deduction.
Sources
- 26 U.S.C. § 225: qualified overtime compensation — premium only, $12,500 / $25,000 joint cap, $100 phase-out per $1,000 of MAGI, joint-return rule, 2025–2028
- 26 U.S.C. § 224: qualified tips — $25,000 cap and the same MAGI phase-out
- IRS: Treasury, IRS provide guidance for individuals who received tips or overtime during tax year 2025 (FLSA premium, divide-by-3 example)
- IRS Notice 2025-69: qualified tips and qualified overtime compensation
- IRS FAQ: deduction for qualified overtime compensation
- IRS Form 1040-ES (2026): 2026 brackets, standard deduction, and the overtime and tips deduction reminders
- 29 U.S.C. § 207: FLSA overtime after 40 hours in a workweek, at one and one-half times the regular rate