Beginning with the 2025 tax year, federal law allows some employees to claim a temporary tax deduction for a portion of qualified overtime pay. This deduction is scheduled to be available through 2028.
What overtime may qualify?
Only a very limited portion of overtime pay may be eligible:
- Only the federal overtime premium required under the Fair Labor Standards Act (the “half” in time-and-a-half)
- Overtime required solely by state law, union contracts, or company policy does not qualify
Because of these restrictions, many employees will not qualify or may qualify for a very small amount.
Why isn’t an overtime amount shown on my 2025 Form W-2?
The IRS has provided transition relief for 2025, allowing employers not to report qualified overtime amounts on Form W-2. Due to the complexity of the law and the risk of reporting incorrect information, the company chose not to include an overtime amount on the 2025 W-2.
Form W-2 reports your total taxable wages, including overtime earnings, but it does not provide a separate breakdown of overtime compensation. To support your personal records - we are providing the Federal Overtime Premium compensation information in connection with your 2025 Form W-2 via a letter sent from Dayforce to your Motivateco email address.
You will find your Total Federal Overtime Premium amount in the section of your letter below:
The overtime wages listed in the letter are included in Box 1 of your Form W-2. Because these earnings are already included in your total wages, no separate tax calculation is required for the overtime amount provided.
This information is being provided for transparency and recordkeeping purposes only and does not change your W-2. If you have questions regarding the overtime amount listed, please send your inquiry to people-payroll@motivateco.com