Can anyone help me understand this no tax on overtime law please? I have worked 500 hours of OT this year and I make $36.71/hr. How much should I expect to receive from that? Or where can I find a link to explain how to calculate it myself? Anything would help. Thank you.

I see a lot of people trying to forecast their tax responsibility for this year by mentioning the amount they made in overtime last year. That is NOT what is being deducted. The bill will deduct the overtime pay that is considered a bonus on top of your normal pay (standard is 1.5 x your hourly rate). Your hours above 40/80 will still be taxed at their regular rate. Thus what you need to base the deduction on is .5 your hourly rate.

For example, let's say John makes $30 an hour, averages 2 hours in overtime a week. The total he grossed JUST on overtime last year was $4680 ($45 x 2 hours x 52 weeks). Only $15 of this overtime pay is now tax deductible, the $30 (his regular rate) is still taxed normally. Thus when John files his taxes, he can claim a $1,560 ($15 x 2 hours x 52 weeks) deduction to lower his taxable income. This is merely a deduction, NOT a refund. $1560 deduction from will merely knock off about $200 from John's tax responsibility (or refund if he overpaid).

Majority of you will not get close to $12,500 tax deduction limit. And this won't put as much money back in your pocket as you think.