Is Overtime Taxed in Kansas in 2026?
As of September 2026, Kansas has not issued official guidance on whether it recognizes the federal OBBBA overtime deduction (IRC §225). Kansas does not automatically conform to federal tax changes – the state must specifically adopt new federal provisions – and the Kansas Department of Revenue has not confirmed whether the overtime deduction applies for Kansas tax purposes.
How Kansas's Overtime Tax Treatment Works
The federal OBBBA overtime deduction (IRC §225) allows eligible workers to deduct up to $12,500 ($25,000 for married filing jointly) in qualifying overtime premium pay from federal adjusted gross income. This deduction covers only the premium portion of overtime pay – the extra 0.5x above the regular hourly rate – not the base-rate hours worked beyond 40.
Why Kansas conformity is uncertain: Kansas does not use a rolling or automatic conformity approach to the Internal Revenue Code. Instead, Kansas conforms to the IRC as of a specific date and must pass legislation to update that conformity date or to adopt specific new federal provisions. This means the OBBBA overtime deduction does not automatically apply for Kansas tax purposes – the legislature or the Department of Revenue must act.
What this means in practice: If Kansas conforms, workers would benefit from reduced Kansas taxes on overtime premium pay at rates up to 5.58%. If Kansas does not conform, overtime premium pay remains fully taxable on the Kansas return, and only the federal deduction provides relief. Kansas workers should watch for legislative action during the next Kansas legislative session.
Federal Overtime Deduction Quick Reference
| Detail | Value |
|---|---|
| IRC Section | §225 (OBBBA) |
| Maximum deduction | $12,500 overtime ($25,000 MFJ) |
| Deduction type | Above-the-line (Schedule 1-A) |
| FICA still applies? | Yes (Social Security 6.2% + Medicare 1.45%) |
| MFS eligible? | No (MFJ or Single/HoH only) |
| Effective dates | Jan 1, 2025 – Dec 31, 2028 |
| Kansas treatment | Does not conform |
| What qualifies? | Overtime premium only (the 0.5x above regular rate), FLSA non-exempt employees |
Worked Examples Comparing Federal and Kansas Treatment
Example 1: Manufacturing worker (single filer, $50,000 income, $8,000 overtime premium)
Qualifying overtime premium: $8,000
Overtime deduction claimed: $8,000 (capped at $12,500)
Estimated federal tax savings: $960.00
Kansas return:
Kansas has not issued guidance on whether it recognizes the federal OBBBA overtime deduction. Kansas does not automatically conform to federal tax changes. If Kansas were to conform, the $8,000 deduction would reduce Kansas taxable income and save an estimated $446 in Kansas tax (at the 5.58% top rate). If Kansas does not conform, the full $8,000 in overtime premium pay remains subject to Kansas income tax.
Example 2: Aviation industry worker (single filer, $80,000 income, $12,500 overtime premium – federal cap reached)
Qualifying overtime premium: $12,500
Overtime deduction claimed: $12,500 (capped at $12,500)
Estimated federal tax savings: $2,750.00
Kansas return:
Kansas has not issued guidance on whether it recognizes the federal OBBBA overtime deduction. If Kansas were to conform, the $12,500 deduction would save an estimated $697 in Kansas tax (at the 5.58% top rate). If Kansas does not conform, the full $12,500 in overtime premium pay remains subject to Kansas income tax at rates up to 5.58%.
Kansas's Static Conformity Approach
Kansas conforms to the Internal Revenue Code as of a specific date set by the legislature, rather than automatically incorporating federal changes as they occur. This static (or fixed-date) conformity approach means that new federal provisions – including the OBBBA overtime deduction (IRC §225) – do not apply for Kansas tax purposes until Kansas updates its conformity date or specifically adopts the provision.
The Kansas Legislature has periodically passed conformity update bills, but the timing varies. Some federal provisions have taken years to be adopted at the Kansas level, while others have been adopted relatively quickly. The OBBBA overtime deduction has not yet been addressed by the Kansas Legislature.
Aviation Capital and Overtime
Wichita, Kansas is widely known as the "Air Capital of the World," home to major aviation manufacturers including Spirit AeroSystems, Textron Aviation (Cessna and Beechcraft), and Bombardier Learjet. These companies employ thousands of production workers, many of whom regularly earn overtime – particularly during periods of high demand or when meeting aircraft delivery schedules. The overtime deduction question is directly relevant to this large workforce.
Agriculture and Manufacturing
Beyond aviation, Kansas's economy features significant agriculture (wheat, cattle, and sorghum production), meatpacking and food processing facilities, and general manufacturing. Seasonal agricultural work and meatpacking plants are particularly associated with overtime hours. Workers in these industries across Kansas would benefit from state-level recognition of the overtime deduction, but must wait for Kansas to act on conformity before any state tax savings materialize.
Related Tools
- No Tax on Overtime Calculator - calculate your federal overtime deduction
- Kansas Tax Guide - full state tax overview
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- W-2 Code TP: Tips Reporting Guide
- W-2 Code TT: Overtime Reporting Guide
- All 51 States: Tips & Overtime Tax Map