All Farm Overtime Will Likely Not Qualify for Employee Tax Deduction

Farmers who pay time and half will likely not qualify their employees for tax deduction

Photo by Tyler Delgado on Unsplash

The BBB provides a new deduction for employees who receive “qualified” overtime pay. The maximum deduction is $12,500 for a single and $25,000 for a married couple and it starts to phase out at 10% as modified adjusted gross income exceeds $150,000 for singles ($300,000 for married couples).

Qualified overtime compensation means:

• Overtime compensation paid to an individual required under section 7 of the Fair Labors Standards Act (FLSA) of 1938, and

• It is in excess of the regular rate

This means that farmers who pay regular rates for overtime pay will automatically prevent their employees from qualifying for the deduction.

What about states such as California, Oregon, Washington, etc. that require time and half for some, or all overtime pay. Will this overtime qualify for the deduction.