IRS Makes it Clear - Farm Overtime Does Not Qualify for New Deduction
The IRS Released Notice 2025-69
The One Big Beautiful Bill Act (OBBBA) provides a new deduction for qualified overtime for the years 2025-2028. OBBBA requires qualified overtime to be what is specified as time and half overtime under the Fair Labor Standards Act (FLSA) which was in enacted back in the 1930s.
The deduction is equal to the 50% increase not the full overtime rate paid.
FLSA indicates that farm labor does not qualify for time and half overtime, therefore, under new Section 225, ag workers who receive greater than straight-time rate for overtime will not qualify for the deduction.
