Eric Schweitzer has come to count on the annual fire season. It’s during those summer months, when millions of acres of forest across the Western United States burn, that he can put in long hours at the Forest Service base in Missoula, Mont., where he works.
The overtime he earns loading flame retardant onto airplanes helps carry him through the winter, when he and other seasonal workers are laid off until the next year. “You’re always chasing that overtime through the summer, which I’m recognizing is not a great habit, but that’s where you make your money, when it’s fire season,” Mr. Schweitzer, 37, said.
So, he said, he and his colleagues were excited about the prospect of President Trump’s promise of “no tax on overtime.” But as he sat down this year to do his taxes, Mr. Schweitzer said, he was surprised to see that much of the overtime he made would still be taxed under the law Republicans passed last year.
“When you hear ‘no tax on overtime,’ it’s like, ‘Oh, yeah, sweet,’ because a lot of my paycheck is overtime in the summer,” he said. “But it was a lot smaller than I was expecting, but I can’t complain too much. I’ll take any deduction I can get.”
Mr. Schweitzer had run into one of several limitations on the tax break that are now confounding workers and companies across the country.
Despite Mr. Trump’s “no tax” branding, overtime pay is still subject to taxes, including payroll taxes and, potentially, state taxes. Some people who work overtime won’t be able to claim the tax break at all. Only Americans who, according to the Fair Labor Standards Act, must be paid time and a half for working more than 40 hours in a week can claim it. And even then, only a portion of the overtime pay — the additional “half” in time and a half — is exempt from the federal income tax.
Even with those and other restrictions, the overtime deduction is among the biggest new tax cuts that the law is offering this year. Mr. Trump and Republicans are betting that changes like the overtime deduction, once they translate into larger-than-usual refunds in Americans’ bank accounts this spring, will stimulate the economy and help the party in the midterm elections.
Of the 55 millions tax returns submitted to the Internal Revenue Service so far, more than 40 percent have claimed at least one of the new personal tax cuts Republicans created, Frank Bisignano, the chief executive of the I.R.S., told lawmakers on Wednesday. Roughly 14 million returns have included claims for the overtime deduction, according to a Treasury Department spokesperson.
“Overtime filers are the largest individual category,” Mr. Bisignano said.
But some of the steps the Republican Party has taken to play up the deduction this year, like repeatedly advertising it as “no tax on overtime,” have helped create the confusion that individuals and companies now face. “I suppose ‘an overtime deduction on the F.L.S.A. premium portion of your overtime’ doesn’t roll off the tongue quite as smoothly,” said Jim Palmer, the executive director of the Wisconsin Professional Police Association, who has tried to clarify the terms for the group’s members.
Like other provisions in the tax law they passed last July, Republicans made the overtime deduction retroactive to the beginning of 2025. That means Americans can write off last year’s overtime earnings this filing season, juicing the size of their refunds. But making the tax cut retroactive has also made it much harder for taxpayers to figure out what they can deduct, leading to mistakes and, potentially, abuse.
Generally, companies have to provide their employees with detailed information about their earnings that they can use to do their taxes. And while the I.R.S. will, in the future, require companies to tell their workers exactly how much in overtime they can deduct, the agency has given companies a pass on doing so for now. As a result, some companies are giving employees information about their eligible overtime earnings, while others are not, leaving the task to individual workers. Several tax experts called the confusion a “wild West.”
“The Treasury and the I.R.S. decided to give businesses tax reporting relief for this year,” said Corey Husak, the director of tax policy at the Center for American Progress, a liberal think tank. “What that means is that by making the tax filing burden easier on businesses, the administration made things much harder on individual taxpayers.”
Nancy Rick, 66, is a registered nurse at a hospital near Palm Springs, Calif., where she works three 12-hour night shifts a week. Under California law, workers must be paid overtime for working more than eight hours a day, whether or not they meet the federal standard of working more than 40 hours in a week.
So, much of Ms. Rick’s pay is overtime. But without clear information from her employer, she’s unsure whether her overtime is eligible for the tax break. She said she would just claim the tax break to find out.
“I’m just going to send it and I’m going to get my refund, and if it’s right, it’s right or it’s not right, I don’t know,” she said. “The worst thing that’ll happen is they’ll send me a letter and say, ‘You owe us whatever.’ I’m not going to jail over this.”
Even beyond varying state and federal requirements for overtime pay, companies may also choose to pay special rates for working holidays or weekends. Some overtime might be paid at the time-and-a-half federal standard, while in some cases overtime might mean double pay. (In the case of double pay, an even smaller portion of overall overtime earnings would count toward the tax break.)
Before Republicans passed the tax law, companies would not necessarily have had to differentiate the reasons for paying overtime, so the deduction has created a new challenge for payroll departments and vendors.
“Employers have been scrambling around trying to figure out: ‘How do we compute all this?’ It’s not pretty,” said Alden Parker, an employment lawyer who leads the Sacramento office of Fisher Phillips. “This year, I think, for lack of a better phrase, will be done in a down and dirty way.”
Jae Shanks works as a supervisor at Costco. Last year, the 35-year-old Oklahoma City resident earned a premium wage for working Sundays, as well as for working more than eight hours in a day or 40 hours in a week. Even before filing season started, Mx. Shanks had started to go through pay stubs to calculate what to deduct, consulting Microsoft’s Copilot artificial intelligence tool along the way.
“It was a lot of math to figure out what the hell to do,” said Mx. Shanks, who uses the gender neutral pronouns they and them.
The overtime deduction could help increase Mx. Shanks’s refund to roughly $1,500, an increase from the $200 to $300 they received in recent years. But after Mx. Shanks prepared their taxes, they noticed that Costco had sent a letter outlining how much of their overtime pay could be deducted.
Costco said roughly $1,700 could be deducted, though Mx. Shanks had calculated roughly $3,700. They haven’t yet decided what to do about the discrepancy.
“I’m not really in the Venn diagram of people who are super flagged for audit,” Mx. Shanks said. “And there’s only like eight and a half people who work at the I.R.S. these days, so I’ll probably leave it, but I’ll go through it to make sure it’s not wildly wrong.”
It is unclear how aggressive the I.R.S., hobbled after losing roughly a quarter of its staff last year, will be in enforcing the terms of the tax break, especially considering that the agency itself said this filing season was part of a “transition year.” The I.R.S. has asked taxpayers to make a “reasonable” effort to determine what they can deduct.
Once Emily Mir, who works in sales, realized that she would have to go through all of her pay stubs herself to determine what overtime she could deduct on her taxes, she decided the effort wouldn’t be worth it. The 34-year-old from Geneva, N.Y., passed on the deduction entirely.
“I don’t think it would have made that much of a difference in what my tax refund would be at the end of the day,” she said. “It does look all nice and fancy, but when it really comes down to it, when you’re doing the taxes yourself, it’s not going to be worth the time.”
Andrew Duehren covers tax policy for The Times from Washington.
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