Don’t Throw Away Your Last Paystub

It Could Save You Money on Your 2025 Taxes

If you worked overtime in 2025, there’s an important tax update you need to know — and it starts with a document many people routinely discard: their final paystub.

A new tax provision introduced for the 2025 tax year may allow qualified overtime pay to be deductible on your federal tax return. However, the ability to claim this deduction depends heavily on proper documentation. In many cases, your final paystub may be the most important proof you have.

Below is what changed, how much you may be able to deduct, and what you should do now to stay prepared.

What Changed in 2025?

Beginning in 2025, a new law allows qualified overtime pay to be deducted on your tax return, subject to specific rules and income limits.

This means that certain overtime earnings may reduce your taxable income — potentially lowering the amount of tax you owe. While this can result in meaningful tax savings, the deduction is not automatic, and proper records are essential.

How Much Can You Deduct?

The maximum deduction amounts are:

• Up to $12,500 for single filers

• Up to $25,000 combined for married couples filing jointly

These limits apply to qualified overtime pay only, and income phaseouts may reduce or eliminate the deduction for higher earners. Eligibility depends on your filing status, income level, and the nature of the overtime pay received.

Here’s the Catch: W-2 Reporting in 2025

While the deduction exists, there is an important reporting issue many taxpayers are unaware of.

For the 2025 tax year, employers are not required to report overtime pay separately on Form W-2. In most cases, overtime wages will simply be included in total wages, without a clear breakdown.

This means:

• Your W-2 alone may not be sufficient to support the overtime deduction

• The IRS may require additional documentation to substantiate the claim

Without clear proof of overtime pay, claiming the deduction could be difficult.

So What Counts as Proof?

Your final paystub may be the only valid evidence showing the overtime details needed to support the deduction.

A final paystub typically includes:

• Total overtime hours worked

• Overtime pay earned

• Year-to-date wage totals

When combined with your W-2, this information can help substantiate that a portion of your wages qualifies as deductible overtime pay.

What You Should Do Now

To protect yourself and stay prepared for tax season, take the following steps:

• Download your final paystub for 2025

• Save the PDF and take screenshots

• Back up the files digitally (cloud or external storage)

• Share the documentation with your tax professional

If you worked for more than one employer in 2025, repeat this process for each job.

Start the New Year Prepared

Tax savings often come down to preparation and documentation. A single document — your final paystub — could make a meaningful difference when it comes time to file your 2025 tax return.

Start the New Year prepared, not leaving money on the table.

If you’re unsure whether your overtime pay qualifies or what documentation you should keep, consult a tax professional for personalized guidance.

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