The overtime deduction for construction workers.

Long summer weeks and deadline pushes make overtime standard on the jobsite. The premium half is now deductible — if you're W-2. Construction's classification habits decide who gets this deduction.

By the Master Plan Bookkeeping tax representation practice

IRS-authorized representation practice

Construction schedules concentrate work: weather windows, project deadlines, and trade sequencing routinely produce 45–55 hour weeks in season. A W-2 tradesperson at $30/hour with 350 annual overtime hours earns about $15,750 in time-and-a-half wages — and the premium third, roughly $5,250, is now deductible from federal taxable income, up to $12,500 ($25,000 joint).

The industry catch is classification. Construction leads the economy in 1099 labor, and independent contractors have no FLSA employer, no required overtime, and no overtime deduction. That line isn't always drawn correctly — a "1099 contractor" who works one crew's schedule with the company's tools may be a misclassified employee — but the deduction follows your actual tax paperwork. W-2 workers qualify; 1099 workers don't, regardless of hours.

Prevailing-wage and Davis-Bacon jobs add a wrinkle worth money: fringe amounts paid as cash wages belong in the FLSA regular rate, raising the overtime premium owed and deductible. Union scale plus supplemental checks makes the qualified number genuinely non-obvious — the free review sorts it out from your W-2 and stubs before anything is filed.

Who Qualifies

W-2 employees only — 1099 contractors excluded

Seasonal Pattern

45–55 hr weeks in season → concentrated OT

What's Deductible

FLSA premium — ⅓ of time-and-a-half wages

Prevailing Wage

Cash fringe raises regular rate → bigger premium

Deduction Cap

$12,500 single · $25,000 joint

Also Check

New car/truck loan interest deduction (personal-use)

— Worked Example —

An electrician at $32/hour who ran 9 overtime hours a week across a 40-week season earned $17,280 in time-and-a-half wages. The premium third — $5,760 — deducts: roughly $1,267 at the 22% bracket.

Figures above are screening estimates under the 2025 federal rules (P.L. 119-21), not tax advice. A licensed professional confirms actual amounts from your W-2 and filed return before anything is submitted to the IRS. Learn more at the 2025 Refund Checkup.

— Construction Workers Questions —

What construction workers actually ask.

Not on a 1099. The deduction requires FLSA employee overtime, and as filed, a 1099 worker has none. If you believe you're misclassified, that's a separate (and potentially valuable) issue to raise with a professional — but the deduction follows the paperwork you actually have.

It doesn't — the FLSA counts each workweek separately. The 55-hour weeks each generate 15 hours of overtime premium regardless of the slow weeks around them. Seasonal trades often have more qualified overtime than their annual hours suggest.

Legitimate expense per-diems aren't wages and don't factor in. Davis-Bacon fringe paid as cash wages does factor into your regular rate, increasing the deductible premium — a detail worth having checked on prevailing-wage work.

If it's a personal-use vehicle (not a business asset you depreciate), US-assembled, and the loan originated in 2025, up to $10,000 of the interest is separately deductible. The checkup covers both deductions in one pass.

— Keep Reading —

Worth checking next.

Overtime · Trades

The overtime deduction for construction workers.

What construction workers actually ask.

I get a 1099 but work for one GC full-time. Can I claim the deduction?

Rain weeks I work 30 hours, push weeks I work 55. How does that average?

Do per-diems and travel pay count?

I bought a new work truck in 2025. Does the loan interest count too?

Worth checking next.

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