Standard AQ - OBBB Qualified Overtime Premium

October 02, 2026 17:34

Report Description

The OBBB Qualified Overtime Premium report provides detailed information on overtime premiums for employees. This report helps you track and verify overtime compensation for accurate W-2 reporting.

Note: This report is specifically designed for the 2025 transition year to help you report qualifying overtime premium to talent.

Regulatory Context

Tax Year 2025 (W-2s issued January 2026)

For tax year 2025, you have reporting flexibility:

Report qualified overtime premium in Box 14 of the W-2 ("Other" box), OR
Provide a separate statement to employees showing their qualified overtime

The W-2 form has not changed for 2025, so no new boxes will appear this year.

What Qualifies as Reportable Overtime Premium?

OBBB Qualified Overtime Premium is the extra "half" portion of "time-and-a-half" pay that is legally required under the federal Fair Labor Standards Act (FLSA) for non-exempt employees. It is the amount paid in excess of an employee's regular hourly rate.

Specific Criteria

FLSA Mandate The overtime must be required under Section 7 of the FLSA. This typically means compensation for hours worked over 40 in a workweek. The FLSA has special alternative work period rules for certain professions like firefighters and law enforcement personnel, which also qualify if met.

The "Premium" Portion Only The qualified amount is only the extra pay above the regular rate.

Example:

If an employee earns:

Regular rate: $20 per hour
Overtime rate: $30 per hour (time-and-a-half)
Reportable premium: $10 per hour (the additional amount above regular rate)

You only report the $10 premium, not the full $30 overtime rate.

What Does NOT Qualify

The following types of pay do not qualify for the OBBB deduction:

Overtime required only by state or local law (e.g., California's daily overtime rules)
Overtime paid voluntarily by the employer or as a result of a collective bargaining agreement that exceeds FLSA requirements
Shift differentials or weekend premiums not required under the FLSA
The straight-time portion of the overtime pay

Tax Deduction Information

The "Qualified Overtime Premium" amount is eligible for a federal income tax deduction for tax years 2025 through 2028.

Deduction Limits:

Up to $12,500 for single filers
Up to $25,000 for married filing jointly

Income Limits: The deduction begins to phase out for taxpayers with a modified adjusted gross income (MAGI) over:

$150,000 for single filers
$300,000 for married filing jointly

Reporting Requirements: Employers are required to report this amount to the IRS and to employees on Form W-2 (or other specified statement). For the 2025 tax year, employers may use a reasonable method to estimate and report this amount.

Report Capabilities

The OBBB Qualified Overtime Premium report allows you to:

Run reports by multiple filters: FEIN, SSN, check dates, and transaction types
Choose your view: Select between Detail or Summary view
Validate overtime transaction types: Run the AQ specifically for your overtime pay codes
Review W-2 amounts: Validate premium amounts that will appear in Box 14 or on separate employee statements

Parameters

Parameter Name	Options	Description
FEIN	Permission-based list	Select by actual FEIN number(not supplier name). Only FEINs you have access to will be available.
SSN	Standard SSN field	Filter by employee SSN. Defaults to % (all).
Start Date (Check Date)	Date chooser	Note: The report also retrieves any paychecks whose payee and week-worked match, regardless of whether the check date is within the selected range.
End Date (Check Date)	Date chooser
Transaction Type (Hours Worked)	Single or multi-select	Select pay codes representing hours worked. This is to differentiate from transactions that are NOT hours worked, such as PTO, Vacation, Holiday, etc. Only pay codes used within the selected date range will display. Limited to the root supplier.
Transaction Type (Reg)	Single or multi-select	Select pay codes representing regular rate hours. Only pay codes used within the selected date range will display.
View Type	Summary or Detail	When selected, “Detail” breaks the report down by employee for each check date. When selected, "Summary" breaks the report down by employee.

Note on Transaction Types: The system displays only non-deduction, transactional pay codes that have been used within the specified date range for the selected supplier.

Report Fields

When Result Type = "Summary"

Field	Description
EmployeeName	Employee's full name
EmployeeID	Unique employee identifier
SSN	Employee's Social Security Number
OverTimeAmount	Calculated using the formula: TotalOTUnits × (WeightedRTPayRate × 0.5)	Note: TotalOTUnits = Total Pay Unit - 40 Weighted RT Pay Rate is the calculated regular pay rate per employee per week worked. It includes: the Additional Regular Pay Rate (from any transaction where IncludeInRegRateOfPay = True), the Discretionary Bonus Pay Rate (from any transaction type where IsNonDiscretionaryBonus = True), and the Commission Pay Rate (from transaction types where Commission = True). For the Virginia OT Plan, the Commission Pay Rate is excluded from this calculation.

When Result Type = "Detail"

Field	Description
EmployeeName	Employee's full name
EmployeeID	Unique employee identifier
SSN	Employee's Social Security Number
CheckDate	Date of paycheck
TransactionType	Overtime transaction type selected in parameters
Pay Rate	Overtime pay rate
RegPayRate	Regular pay rate	Note: Weighted RT Pay Rate is the calculated regular pay rate per employee per week worked. It includes: the Additional Regular Pay Rate (from any transaction where IncludeInRegRateOfPay = True), the Discretionary Bonus Pay Rate (from any transaction type where IsNonDiscretionaryBonus = True), and the Commission Pay Rate (from transaction types where Commission = True). For the Virginia OT Plan, the Commission Pay Rate is excluded from this calculation.
OverTime Amount	Calculated overtime premium amount (the "half" in time-and-a-half). Calculated using the formula: TotalOTUnits × (WeightedRTPayRate × 0.5)	Note: TotalOTUnits = Total Pay Unit - 40

Use Cases

This report helps staffing agencies:

Calculate qualified overtime premiums for compliance verification
Share detailed wage information with temporary workers
Improve transparency in overtime compensation reporting
Streamline year-end tax documentation processes
Prepare for accurate Box 14 W-2 reporting
Ensure proper calculation of overtime premium (not total overtime wages)
Verify FLSA-required overtime versus state/local or voluntary overtime