The OBBB (One Big Beautiful Bill) Qualified Overtime Premium 2026 report is a new Avionté Classic AQ that pulls the qualified overtime premium amount already calculated during payroll processing, so you don't need to manually select overtime or regular pay codes. Use it to review and verify overtime compensation for accurate W-2 reporting.
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).
Report Capabilities
The OBBB Qualified Overtime Premium 2026 report allows you to:
- Run reports by multiple filters: FEIN, SSN, and check dates
- Choose your view: Select between Detail or Summary view
- Rely on automatic calculation: The qualified overtime premium is calculated automatically during payroll processing — there is no need to select specific overtime or regular pay codes
- Review W-2 amounts: Validate premium amounts that will appear in Box 12 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 | |
| Result Type | Summary or Detail (defaults to Summary) |
When selected, "Detail" breaks the report down by employee for each check date. When selected, "Summary" breaks the report down by employee. |
Report Fields
When Result Type = "Summary"
| Field | Description | |
|---|---|---|
| EmployeeName | Employee's full name | |
| EmployeeID | Unique employee identifier | |
| SSN | Employee's Social Security Number | |
| QualifiedOTAmount | Calculated using the formula: TotalOTUnits × (WeightedRTPayRate × 0.5) |
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. |
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 | |
| QualifiedOTRate | The weighted regular pay rate used to calculate the qualified overtime premium | 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. |
| QualifiedOTAmount | 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 12 W-2 reporting
- Ensure proper calculation of overtime premium (not total overtime wages)
- Verify FLSA-required overtime versus state/local or voluntary overtime
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