Baxter & Harbin, LLC

🚨 New Overtime Tax Break: What Employers Need to Know

Starting January 1, 2025, workers who earn federal‐mandated overtime pay can deduct the premium portion of that pay from their taxable income—potentially keeping more of their extra hours worked.

Here’s what employers need to communicate and prepare for:

Who Qualifies for the Overtime Deduction

- FLSA non-exempt employees – those entitled to time-and-a-half pay once they exceed 40 hours/week.

- Only the overtime premium (the “half” in time-and-a-half), not total wages, qualifies.

- Employees must have a valid Social Security number (and spouses if filing jointly) to claim the break.

Deduction Limits & Phase-Out

Maximum deduction per taxpayer:

- $12,500 for single filers
- $25,000 for married filing jointly
- Phase-out begins when modified AGI exceeds $150,000 (single) or $300,000 (joint).
- For every $1,000 over the threshold, the deduction is reduced by $100.

- Temporary provision: applies to tax years 2025–2028 unless extended by Congress.

Reporting Requirements for Employers

- Track and aggregate qualified overtime compensation separately in payroll systems.

- Report total overtime premium on employees’ Forms W-2 in a new line or designated box.
- Furnish year-end statements showing total overtime pay so employees can claim the deduction on their 2025 returns.
Action Items
- Review payroll software for overtime tracking and separate reporting fields.
- Update W-2 templates to include an overtime premium line.

- Communicate with staff: explain who qualifies, how much they can deduct, and when to expect updates on their W-2.

Congrats to our final 2024 Business of the Month sponsored by AF Realty Group, Baxter & Harbin, LLC!

We had the BEST time celebrating this special business! A long standing member of the Chamber of Commerce and serving the Perry area for overr 40 years, Baxter and Harbin is a staple in the community!

Once again, congratulations to this amazing team and thank you for your continuous support of the Perry Area Chamber of Commerce!


✨ Baxter & Harbin, LLC
📍 1005 Jernigan Street, Perry, GA, United States, Georgia
📞 478-987-2641

Due to the impact of Hurricane Helene in Georgia, USDA has approved a temporary SNAP Hot Foods waiver in 84 counties in Georgia. SNAP retailers in Georgia may temporarily accept SNAP benefits in exchange for hot foods through November 7, 2024.

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