No Tax on Overtime · trucking & logistics · tax years 2025–2028

No Tax on Overtime for truck drivers and warehouse workers

This is the industry where the headline is most misleading. A lot of drivers will get nothing from the overtime deduction, for a reason that has nothing to do with income. A lot of warehouse workers will get plenty. Here's the line.

Advertisement
The catch: The deduction only covers overtime that federal law requires. Most CDL drivers of trucks over 10,000 lb in interstate commerce are exempt from federal overtime under the Motor Carrier Act, so nothing they're paid counts — even when the company pays time-and-a-half. The IRS lists "certain employees of motor carriers" as an exempt group.

The Motor Carrier Act exemption, in plain English

Section 13(b)(1) of the Fair Labor Standards Act says the federal overtime rule doesn't apply to employees whose work affects the safety of vehicles in interstate commerce and who are regulated by the Department of Transportation. In practice that covers four groups working on vehicles over 10,000 pounds gross vehicle weight rating: drivers, driver's helpers, loaders (people responsible for how a truck is loaded for safety) and mechanics.

"Interstate" is broad. You don't have to cross a state line yourself; hauling freight that's part of an interstate shipment — a load that came in from another state and you're delivering the last leg — counts, and DOT says a driver who could reasonably be expected to make an interstate trip is covered for four months after.

If you're exempt, the FLSA doesn't require overtime, so overtime is never "qualified overtime compensation," and there's nothing to deduct. That's true whether you're paid hourly, by the mile, or by percentage.

Who in trucking does qualify

  • Drivers of small vehicles. The "small vehicle exception" restores federal overtime for employees who work, in whole or in part, on vehicles of 10,000 lb GVWR or less — as long as the vehicle isn't hauling hazmat placards or more than 8 passengers for pay. Delivery-van drivers, sprinter-van couriers, parcel drivers in step vans under the limit, and many last-mile drivers are non-exempt and can deduct their overtime premium.
  • Purely intrastate drivers whose freight never touches interstate commerce — a local concrete driver, an in-state grocery route that never involves out-of-state goods. This is narrower than it sounds; talk to your payroll department about how you're classified.
  • Drivers whose employers voluntarily follow the FLSA — no. Voluntary overtime still isn't required, so it doesn't count. The IRS was explicit that only FLSA-mandated overtime qualifies.

Warehouse and logistics workers

Here the news is good. Pickers, packers, forklift operators, sorters, inventory clerks, dispatchers, yard jockeys who don't drive on public roads, and most dock workers are ordinary non-exempt hourly employees. Overtime after 40 hours is federally required, and the premium half is deductible up to $12,500 a year ($25,000 joint). Peak-season overtime at a distribution center can add up to a real deduction. A picker at $21 an hour who works 10 overtime hours a week for 40 weeks has a $4,200 deduction, worth about $500 in the 12% bracket.

The one gray area is loaders. If your job includes responsibility for the safe loading of trucks that go interstate — deciding placement, weight distribution, securement — DOL treats you as exempt under the Motor Carrier Act. Someone who just moves pallets onto a trailer under someone else's direction usually isn't. Your employer's classification decides what shows up in your W-2 code TT.

Owner-operators and 1099 drivers

Independent contractors have no employer and no FLSA overtime at all, so there's no overtime deduction. (Contractor drivers who receive tips may qualify for the separate No Tax on Tips deduction — delivery drivers are on the occupation list.)

How to tell which side you're on

  1. Look at your 2026 W-2. If Box 12 has a code TT amount, your employer treated your overtime as FLSA-required. If it doesn't and you were paid overtime, they classified you as exempt.
  2. Check the vehicle weight. GVWR is on the door-jamb sticker. At or under 10,000 lb, you're likely non-exempt. Over it, and the freight is interstate, you're likely exempt.
  3. Ask payroll. "Am I classified as exempt under the motor carrier exemption?" is a yes/no question they can answer.

If you believe you were misclassified, that's a wage-and-hour question for the Department of Labor, not a tax question. The deduction follows the classification on your W-2.

What it's worth if you do qualify

≈ $500 backWarehouse picker, $21/hr, 10 OT hrs/wk for 40 weeks: 400 × $10.50 = $4,200 deduction. Single, $52,000, 12% bracket.
≈ $940 backParcel van driver (vehicle under 10,000 lb), $26/hr, 12 OT hrs/wk for 50 weeks: 600 × $13 = $7,800 deduction. Married, $110,000 joint, 12% bracket.
$0OTR driver, 80-hour weeks, paid by the mile, exempt under the Motor Carrier Act.

Calculate your overtime deduction →

Frequently asked questions

Do truck drivers qualify?

Most CDL drivers of trucks over 10,000 lb in interstate commerce don't, because federal law doesn't require their overtime. Small-vehicle and some local drivers do.

Do warehouse workers qualify?

Yes, for overtime over 40 hours a week, except loaders responsible for safe loading of interstate trucks.

My company pays me OT after 40. Why doesn't it count?

Because it's voluntary, not FLSA-required, if you're exempt under the Motor Carrier Act.

Do Amazon DSP or FedEx Ground drivers qualify?

If the vans are 10,000 lb GVWR or less, generally yes as non-exempt employees of the contractor. Check your W-2 for code TT.

Do dispatchers qualify?

Yes, if hourly and non-exempt. Dispatchers aren't covered by the motor carrier exemption.

I'm an owner-operator. Anything for me?

No overtime deduction. Tips, if any, may qualify under the tips deduction.

Sources