Understanding the New Overtime Deduction: What Counts & What Doesn’t

When you work overtime, you're giving more of yourself to your community — more hours, more energy, more heart. And now, thanks to new federal provisions, some of that overtime may reduce your taxable income. But the rules can feel confusing, especially when different departments, contracts, and states all handle overtime differently.

We're here to make this simple.

Before you file, here's a clear, no nonsense look at which overtime qualifies, which doesn't, and how to understand your own pay. And remember: you never need to be an expert to talk to us — we're here to help, no commitment required.

You can schedule a quick conversation with a Firefighters First tax advisor anytime.

What's This New Deduction About?

The new deduction allows you to reduce your taxable income based on the overtime premium you earn — specifically the “extra half” of FLSA required overtime (“time and a half”).

Wait… What Does FLSA Mean?

FLSA stands for the Fair Labor Standards Act — a federal law that sets standards for minimum wage, record keeping, and overtime rules for most workers in the U.S.

For firefighters, the FLSA defines when overtime legally begins (for example, the well known 212 hours in a 28 day work cycle). Only overtime that meets this federal definition is considered FLSA required overtime — which is the only kind that may count toward the deduction.

While the IRS and the Department of Labor offer official firefighter specific FLSA guidance, we've made the rules easier to understand in this article. It's just one example of how we serve as a trusted resource for our Fire Family — and if you still have questions, we'd love to chat. No pressure, no obligation.

What Type of Overtime Qualifies?

Type of Overtime Qualifies for the New Deduction? Why
FLSA Required Overtime (Over 40 hrs/week for most workers; firefighter standard = 212 hrs in a 28 day FLSA cycle) ✅ Yes Only FLSA required OT includes the federally defined overtime premium; the deduction applies to the half time premium portion.
Contract Mandated OT (Union agreements, CBAs, MOUs) ❌ No Good pay, but not federally required; therefore not FLSA overtime.
State Mandated OT ❌ No State laws operate separately from federal FLSA requirements.
Employer Required / Departmental OT ❌ No Even if your department calls it overtime, it doesn't qualify unless FLSA requires it.
Holiday Pay, Bonuses, Step Up/Acting Pay, Shift Differentials, Hazard Pay ❌ No These are premium pays, not FLSA overtime premiums.

Still not sure where your hours fall? Chat with us — a tax advisor can clarify everything in a few minutes.

Important Numbers to Know

Those numbers may feel like a lot — but we can help you understand exactly how they apply. Book a no commitment conversation with a Firefighters First tax expert.

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