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Tax Year 2026Updated July 13, 2026

Overtime Tax for Firefighters in 2026: How the OBBBA Deduction Works with 7(k) Schedules

Firefighters are among the occupations best positioned to benefit from the OBBBA overtime deduction (IRC §225) – but the calculation works differently than for standard 40-hour-workweek employees. Fire protection employees operate under FLSA Section 7(k), which uses extended work periods (7-28 days) with higher overtime thresholds instead of the standard 40-hour week. Understanding how 7(k) overtime translates to the OBBBA deduction is essential for maximizing your tax savings.

The 7(k) Work Period – How Firefighter Overtime Differs

Under FLSA Section 7(k), public fire departments can establish work periods of 7 to 28 consecutive days. Overtime is owed when a firefighter's hours exceed a maximum threshold for the chosen work period:

Work Period LengthOT Threshold (Fire Protection)Equivalent Weekly Hours
28 days212 hours53.0 hrs/week
27 days204 hours52.9 hrs/week
24 days182 hours53.1 hrs/week
14 days106 hours53.0 hrs/week
7 days53 hours53.0 hrs/week

Key difference from standard workers: A firefighter on a 28-day work period does not earn overtime until hour 213. In a standard FLSA job, overtime begins at hour 41 each week. This means firefighters work significantly more "straight time" hours before triggering overtime – but when overtime does trigger, the premium is calculated the same way (time-and-a-half on the regular rate).

Calculating the Regular Rate for 7(k) Firefighters

The regular rate for firefighters is determined by dividing total straight-time compensation by total hours worked in the work period (up to the 7(k) threshold). For salaried firefighters, the regular rate is the salary divided by the number of hours the salary is intended to cover.

Common adjustments that affect the regular rate calculation:

Worked Examples

Example 1: Municipal firefighter on 28-day 7(k) work period (Kelly schedule)

Annual salary: $62,000 (covers 2,756 scheduled hours/year)
Regular rate: $62,000 ÷ 2,756 = $22.50/hr
28-day work period: 240 hours scheduled (ten 24-hr shifts)
Sleep deduction: 8 hrs × 10 shifts = 80 hrs deducted
Countable hours: 240 − 80 = 160 hrs (under 212 threshold – no FLSA OT this period)

BUT: Callback shifts add 2 additional 24-hr shifts = 48 countable hrs
New total: 160 + 48 − 16 (sleep on callbacks) = 192 hrs (still under 212)

In a heavier period (3 callbacks):
Countable: 160 + 72 − 24 = 208 hrs – still under 212, no OT

Heavy month (4 callbacks):
Countable: 160 + 96 − 32 = 224 hrs – 12 hrs OT!
OT premium: 12 hrs × $11.25 (0.5x of $22.50) = $135
Annual premium (estimated 4 heavy months): $135 × 4 = $540
Federal savings (12% bracket): $64.80

Example 2: Federal wildland firefighter – 14-day fire assignment

GS-6 Step 5 rate: $24.12/hr (base, locality-adjusted)
14-day fire assignment: 16 hrs/day × 14 days = 224 total hours
7-day work period OT threshold: 53 hours

Week 1: 112 hrs worked − 53 straight time = 59 hrs OT
Week 2: 112 hrs worked − 53 straight time = 59 hrs OT
Total OT: 118 hours

OT premium: 118 hrs × $12.06 (0.5x premium) = $1,423 per assignment
Two fire assignments per season: $1,423 × 2 = $2,846

Federal deduction: $2,846 (under $12,500 cap)
Federal savings (12% bracket): $341.52

Note: Hazard pay (25%) and Sunday/holiday premium (25%) are NOT deductible under IRC §225 – only the time-and-a-half overtime premium counts.

Municipal vs. Federal Firefighters – Key Differences

FactorMunicipal/County FirefighterFederal Wildland Firefighter
Work period7(k): 7–28 day periods, typically 28Standard 7-day workweek (FLSA §7)
OT threshold212 hrs (28-day) or scaled equivalent40 hrs/week (standard FLSA)
Typical OT volumeModerate (callbacks, mandatory holdovers)High during fire season (60–100+ hrs/week)
Sleep time deductionCommon (reduces countable hours)Generally not applicable on fire line
Hazard payVaries by department25% (not deductible as OT premium)

What to Watch on Your W-2

Your employer should report qualifying overtime premium in W-2 Box 12 Code TT. For firefighters, this should include only the 0.5x premium portion of hours that exceed the 7(k) threshold – not total overtime wages, not hazard pay, and not callback flat-rate pay that is not overtime.

If Code TT seems incorrect, verify with your department's payroll office. Common errors include: reporting total overtime wages instead of premium-only, including hazard pay in the overtime calculation, or miscounting countable hours (forgetting sleep time deductions).

Related Tools and Resources

Frequently Asked Questions

Are firefighters eligible for the OBBBA overtime deduction?
Yes, but with an important nuance. Firefighters are FLSA non-exempt employees – they are entitled to overtime pay. However, under FLSA Section 7(k) (the "207(k) exemption"), fire departments can use work periods of 7 to 28 days instead of the standard 40-hour workweek. Overtime triggers at higher thresholds (e.g., 212 hours in a 28-day period). Firefighters who earn FLSA overtime under the 7(k) schedule are eligible for the OBBBA deduction (IRC §225) on the premium portion.
What is the FLSA 7(k) / 207(k) exemption for firefighters?
FLSA Section 7(k) allows public agencies to establish work periods of 7 to 28 consecutive days for fire protection and law enforcement employees. Overtime is owed when hours exceed a sliding-scale maximum rather than the standard 40 hours per week. For a 28-day work period, fire protection employees earn overtime after 212 hours. For a 24-day period, it is 182 hours. The 7(k) schedule recognizes that 24-hour shift schedules (common in fire service) do not fit a standard workweek.
How does the 24-hour shift schedule affect the overtime deduction?
Most career firefighters work a 24-hour shift schedule (e.g., 24 on / 48 off, or Kelly schedule). Under a standard 28-day 7(k) work period, a firefighter working ten 24-hour shifts would log 240 total hours. The first 212 hours are straight time; the remaining 28 hours are overtime. However, departments that pay "sleep time" deductions (excluding hours designated for sleep under 29 CFR §553.222) may reduce the countable hours, affecting when overtime kicks in. The deductible premium applies only to hours that actually trigger FLSA overtime.
Does the deduction apply to fire department overtime details and callbacks?
Callback pay and overtime details (being called in on a day off) that result in hours exceeding the 7(k) threshold generate FLSA overtime. The premium portion of this overtime is deductible. However, some fire departments pay callback at a flat overtime rate regardless of total hours worked. If the callback rate is paid as overtime premium above the regular rate, and the total hours exceed the 7(k) threshold, the premium qualifies.
Are volunteer firefighters eligible?
Generally no. Volunteer firefighters are not employees and do not receive W-2 wages. Nominal stipends paid to volunteers are typically not considered overtime pay. The OBBBA deduction applies to employees who receive W-2 reported overtime premium (Box 12 Code TT). Career (paid) firefighters, combination department paid staff, and part-time paid firefighters receiving W-2 wages with overtime are eligible.
How much can firefighters save with the overtime deduction?
The maximum deduction is $12,500 per year ($25,000 MFJ). A firefighter in the 22% federal bracket who reaches the cap saves $2,750.00 in federal income tax. In states that conform to OBBBA, additional state savings apply. Firefighters with mandatory overtime, wildfire overtime, or frequent callbacks can easily generate $12,500+ in premium pay annually.
Does the deduction apply to wildfire overtime for federal firefighters?
Federal firefighters (USFS, BLM, NPS) who earn FLSA overtime during wildfire assignments generate qualifying overtime premium. Federal wildland firefighters often work 16-hour days for 14-day fire assignments, generating significant overtime. The premium portion is deductible up to the $12,500 cap. Note: hazard pay and premium pay for fire-line work are separate from overtime premium and are not deductible under IRC §225.