Overtime Pay: Tax Exemption
Starting in tax year 2025, eligible Pinellas County employees can claim a federal income tax deduction for a portion of their qualified overtime earnings per recent legislation.
This deduction lowers your taxable income when you file your annual tax return. It is not a full tax exemption, and it only applies to federal income taxes for tax years 2025 through 2028.
Who qualifies for the tax exemption on overtime pay?
- Classified (hourly) employees who work overtime as defined under the Fair Standards Labor Act (FLSA) should be eligible, but employees that may qualify should consult their tax professional.
- This does not apply to overtime or premium pay that the County has elected to pay to classified/excluded or exempt employees based on our Personnel Rules.
- The federal income tax deduction applies only to qualified overtime as defined by federal law, which is typically for hours worked over 40 in a week.
What are the limits to the tax exemption on overtime pay?
- Individuals can deduct up to $12,500 and married couples filing jointly can deduct up to $25,000 of qualified overtime pay per year.
- The deduction phases out for taxpayers with a modified adjusted gross income over $150,000 for single filers and $300,000 for joint filers.
How does the deduction work?
- Amount: Your qualified overtime pay in 2025 will be reported on a separate statement (not on your W-2 form). The deduction applies to the premium portion of your overtime—the “half” of “time-and-a-half” pay.
- Pay taxes up front: Pinellas County will withhold federal income tax, as well as Social Security and Medicare taxes, from all your overtime wages.
- When filing taxes: When you file your federal income tax return, you may claim the deduction, which is available even if you take the standard deduction.
- Other taxes: This deduction reduces your federal income tax liability. It does not eliminate or reduce Social Security or Medicare (FICA) taxes on overtime pay.
What if I have questions?
Human Resources and Payroll staff cannot provide individualized tax advice. For guidance on your specific situation, please consult with your professional tax advisor.
For general payroll questions:
- Employees of the Board of County Commissioners, Business Technology Services, Clerk of the Circuit Court & Comptroller, County Attorney, Human Resources, Office of Human Rights: Contact Payroll by email at payroll@mypinellasclerk.gov or call (727) 464-8392.
- Employees of Forward Pinellas, Property Appraiser, Supervisor of Elections, and Tax Collector: Call your department’s payroll contact.
10/23/25
