Who can claim the new overtime premium deduction?

FLSA‑covered employees who earned overtime in 2025 can claim the premium portion for 2025–2028 on U.S. federal returns. It applies to the 0.5× premium above straight‑time, not total overtime pay. Exempt salaried staff and contractors usually do not qualify. Confirm with HR, then file before the tax filing deadline.

How do I calculate the premium if my W‑2 does not show it?

Use weekly pay stubs. Premium = 0.5 × regular rate × overtime hours, summed for all weeks in 2025. Save stubs, employer confirmations, and your worksheet. Note that W‑2 overtime reporting may be incomplete for 2025. Claim only the premium and file by the tax filing deadline.

Does this U.S. deduction change my Australian tax return?

It affects your U.S. taxable income, not Australian rules. Report foreign income to the ATO as required and claim any foreign income tax offset where eligible. Do not deduct the overtime premium again in Australia. Keep USD and AUD records. Coordinate timing around the U.S. tax filing deadline.

What if my employer later issues a corrected statement?

Compare it with your records. If the premium changes, you may need to amend your U.S. return. Avoid double counting by keeping a clear worksheet and dated emails with payroll. If the correction arrives after the tax filing deadline, consider an amended return once you confirm the final figures.

Global Market Insights

Tax Filing Deadline: How to Claim New Overtime Deduction, February 20

ByDanny Kontos February 20, 2026February 20, 2026

The new U.S. overtime premium deduction applies to 2025–2028 and can be claimed this filing season. With the tax filing deadline approaching, Australians with U.S.-source wages or U.S. investments should understand how it works. The rule targets “no tax on overtime” premiums under FLSA. It may lift refunds and short‑term spending in the U.S., which matters for ASX exposure. We explain eligibility, calculation, and documentation so you can file on time and avoid costly errors.