per AICPA TAX rewind webinar

Qualified overtime — The basics
Definition (Notice 2025-69)

• Qualified overtime compensation is overtime compensation required and paid under 29 USC Sec. 207 that is in excess of the employee’s regular rate (i.e., the premium portion). Only FLSA-eligible employees (covered + not exempt) qualify.
• Up to $12,500 per return ($25,000 joint).
• Begins at MAGI $150k / $300k (same as tips).
• If someone says “I made $15,000 in overtime,” your next question is: “Was that the total overtime line… or the premium portion?” Only the premium portion is the starting point.

The “Premium-Only” concept (time-and-a-half)
If overtime is paid at 1.5× the regular rate:

• Why “divide by 3” shows up in the IRS examples
• If the pay stub lumps “overtime” as the total 1.5× amount (regular + premium), then the premium portion is one-third of that total. That’s why the IRS example uses “divide by 3.”
• Qualified OT (premium) = Total OT line × (1/3) [for 1.5× overtime]