Try a calculator
Tax Year 2026Updated July 13, 2026

Does Massachusetts Tax Overtime in 2026?

Massachusetts is expected to tax overtime pay in 2026, though final guidance is pending. The Massachusetts Comptroller has explicitly confirmed that the OBBBA 'No-Tax Overtime' provision does not apply to Massachusetts state withholding. A draft Technical Information Release (TIR) from October 2025 further indicates non-conformity across all OBBBA deductions. Massachusetts conforms to the IRC as of January 1, 2024 - the OBBBA was enacted in 2025, outside the conformity window. Overtime premium pay remains fully subject to the Massachusetts 5% income tax. Note: The final TIR has not yet been published.

How Massachusetts's Overtime Tax Treatment Works

Massachusetts uses a fixed-date IRC conformity approach: the state's income tax code references the Internal Revenue Code as of January 1, 2024. The OBBBA - which created the federal overtime deduction under IRC §225 - was enacted in 2025, after the conformity cutoff. This means the federal overtime deduction does not automatically apply to Massachusetts unless the legislature updates the conformity date or specifically adopts the provision.

The Massachusetts Comptroller took the additional step of issuing explicit guidance confirming that the OBBBA "No-Tax Overtime" provision does not apply to state withholding. This means Massachusetts employers should not reduce state income tax withholding to account for the federal overtime deduction. The Department of Revenue's draft TIR from October 2025 supports this position across all three OBBBA deductions (tips, overtime, and senior bonus).

In practice, workers who claim the federal overtime deduction on their IRS return (up to $12,500 for single filers, $25,000 for MFJ) must add back that amount when filing their Massachusetts return. The overtime premium pay - the 0.5x portion above the regular rate for time-and-a-half - remains fully taxable at Massachusetts's flat 5% rate.

Federal Overtime Deduction Quick Reference

DetailValue
IRC Section§225 (OBBBA)
Maximum deduction$12,500 overtime ($25,000 MFJ)
Deduction typeAbove-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 datesJan 1, 2025 – Dec 31, 2028
Massachusetts treatmentExpected no (pending final guidance)
What qualifies?Overtime premium only (the 0.5x above regular rate), FLSA non-exempt employees

Worked Examples Comparing Federal and Massachusetts Treatment

Example 1: Nurse (single filer, $60,000 income, $8,000 overtime premium)

Federal return:
Qualifying overtime premium: $8,000
Overtime deduction claimed: $8,000 (capped at $12,500)
Estimated federal tax savings: $1,760.00

Massachusetts return:
Massachusetts is expected to not recognize the federal overtime deduction. The full $8,000 in overtime premium pay remains subject to the Massachusetts 5% income tax. Estimated MA tax on this overtime: $400. Workers claiming the federal deduction must add it back on their MA return. (Final guidance pending.)

Example 2: Construction worker (single filer, $45,000 income, $5,000 overtime premium)

Federal return:
Qualifying overtime premium: $5,000
Overtime deduction claimed: $5,000 (capped at $12,500)
Estimated federal tax savings: $600.00

Massachusetts return:
Massachusetts is expected to not recognize the federal overtime deduction. The full $5,000 in overtime premium pay remains subject to the Massachusetts 5% income tax. Estimated MA tax on this overtime: $250. (Final guidance pending.)

Massachusetts-Specific Notes on Comptroller Guidance in Effect

Status: Expected non-conformity, Comptroller guidance active, final TIR pending. Unlike the tips deduction, where the state's position rests primarily on the draft TIR, the overtime deduction has an additional layer of certainty: the Massachusetts Comptroller has issued an explicit announcement confirming that OBBBA overtime deductions do not apply to state withholding. This guidance has practical force - employers are already withholding state income tax on overtime without any OBBBA adjustment.

This page will be updated when the final TIR is released. Workers should plan on overtime being fully taxable in Massachusetts for 2026.

PFML and Overtime as Additional Massachusetts Costs

Massachusetts workers also pay Paid Family & Medical Leave (PFML) contributions on overtime wages. For 2026, the employee PFML rate is 0.46% on wages up to the Social Security wage base ($176,100 for 2025; 2026 base expected to increase). This means overtime workers in Massachusetts face a combined state burden of approximately 5.46% (5% income tax + 0.46% PFML) on overtime earnings - none of which is offset by the federal OBBBA deduction at the state level.

Related Tools

Frequently Asked Questions

Does Massachusetts conform to the federal overtime deduction under the OBBBA?
Massachusetts is expected to not conform. The Massachusetts Comptroller has explicitly confirmed that 'No-Tax Overtime' under the OBBBA does not apply to Massachusetts state withholding. A draft TIR from October 2025 further indicates non-conformity. Massachusetts conforms to the IRC as of January 1, 2024, and the OBBBA was enacted in 2025 - outside the conformity window. The final TIR has not yet been published.
Is the Massachusetts non-conformity on overtime final?
The Massachusetts Comptroller's guidance on overtime withholding is in effect and has practical force. However, the final Technical Information Release from the Department of Revenue has not yet been published. The expected outcome is non-conformity, but workers should monitor mass.gov/dor for the official final position.
What tax rate does Massachusetts apply to overtime pay?
Massachusetts imposes a flat 5% income tax rate on overtime pay - the same rate as regular wages. The additional 4% surtax only applies to total taxable income exceeding $1,107,750 for TY2026. There is no special overtime rate or bracket in Massachusetts.
Do I need to add back the federal overtime deduction on my Massachusetts return?
Yes, if final guidance confirms non-conformity (as expected). Workers who claim the federal overtime deduction (up to $12,500 single / $25,000 MFJ) on their federal return will need to add that amount back when computing Massachusetts taxable income.
Does Massachusetts have its own paid family and medical leave that applies to overtime?
Yes. Massachusetts Paid Family & Medical Leave (PFML) contributions apply to overtime wages. For 2026, the employee PFML rate is 0.46% on wages up to the Social Security wage base. This is in addition to the 5% income tax - overtime workers pay both.
What is the difference between the Comptroller guidance and the DOR TIR?
The Massachusetts Comptroller's announcement specifically addresses state withholding - telling employers not to reduce state withholding for OBBBA deductions. The DOR's Technical Information Release (TIR) addresses the broader income tax treatment for filing purposes. Both point to the same conclusion: OBBBA overtime deductions do not apply at the state level.