No Tax on Overtime: Why Most Truck Drivers Don't Qualify — and Who Does
Bottom line: the new "No Tax on Overtime" deduction is one most interstate truck drivers cannot use — long-haul drivers are already exempt from federal overtime law, so their overtime pay does not qualify. The drivers who can benefit are mainly local, short-haul, and light-vehicle drivers. Owner-operators on 1099s get nothing from this one. Here is who qualifies and how much it is worth.
What the deduction is
Under the One Big Beautiful Bill Act (OBBBA, signed July 2025), for tax years 2025 through 2028, qualified overtime pay is deductible — up to $12,500 per year ($25,000 for joint filers). It phases out once MAGI exceeds $150,000 ($300,000 joint). You can claim it whether or not you itemize.
Two key limits:
- Only overtime that the Fair Labor Standards Act (FLSA) requires your employer to pay counts
- And only the premium half of time-and-a-half is deductible — not the full wage for overtime hours
Why most interstate drivers are left out
The FLSA contains the Motor Carrier Exemption: interstate commercial drivers under DOT safety jurisdiction are not legally owed time-and-a-half. Since your overtime is not FLSA-required, it does not meet the deduction's definition — even if your company voluntarily pays overtime.
Drivers who typically do qualify:
- Local / intrastate hourly drivers outside DOT interstate jurisdiction who earn true time-and-a-half
- Drivers of light vehicles (generally 10,000 lbs or less), who are usually non-exempt even in interstate work
- Hourly non-driving staff — warehouse, dock, dispatch
Owner-operators and 1099 drivers
Not eligible at all. The deduction applies to employer-paid, FLSA-mandated overtime. Self-employment income has no "overtime" — none of your 1099 income qualifies.
If you do qualify: how to claim it
- 2025: employers are not required to report overtime separately; look for W-2 Box 14 or a separate statement, and use the new Schedule 1-A to figure the deduction
- 2026 onward: W-2s will report qualified overtime in a dedicated box, and only separately reported amounts are deductible
- You need a valid SSN, and married taxpayers must file jointly
FAQ
I drive long-haul and my company pays overtime. Can I deduct it?
Probably not. Interstate heavy-truck drivers fall under the Motor Carrier Exemption, so that overtime is not FLSA-required and does not qualify. It ultimately depends on whether your role is under DOT jurisdiction.
Is the full overtime wage deductible?
No. Only the premium above your regular rate. If your regular rate is $30 and overtime is $45, only $15 per overtime hour is deductible.
I'm an owner-operator working 3,000 hours a year. Does any of that count as overtime?
No. Self-employed drivers have no FLSA overtime, so this deduction never applies to 1099 income. Your tax savings live elsewhere: Per Diem, depreciation, and Schedule C expenses.
When does this deduction end?
As written, it covers tax years 2025 through 2028. Any extension is up to Congress.
This article is general tax information, not personalized advice. Please consult a professional for your situation.