OBBBA Tax Deduction for Nurses & Healthcare Workers
Nurses, CNAs, and other hourly healthcare staff are a core overtime population — 12-hour shifts, mandatory overtime during short-staffing, and holiday coverage are common. The deduction covers only the true FLSA overtime premium, which healthcare pay structures can make easy to mix up with shift differentials.
Qualifies
- The overtime premium (the extra 0.5×) on hours worked over 40 in a week, for non-exempt hourly staff
- Mandatory overtime during short-staffing or emergencies, if it triggers FLSA overtime pay
- Overtime premium earned on holiday shifts, to the extent it stems from hours over 40/week
Doesn't qualify
- Shift differentials (extra pay for nights, weekends, or holidays) — these raise your regular rate but are not the FLSA overtime premium itself
- Salaried charge nurses, nurse managers, or other roles classified as FLSA-exempt — they don't qualify for the overtime deduction even if they work long hours
- "Comp time" taken as paid time off instead of an overtime premium — there's no cash overtime premium to deduct if you didn't receive one
Worked example
A single filer with $58,000 regular wages + $7,500 overtime premium pay (federal only — your state may also tax this income; check the State Conformity Tracker):
- Net OBBBA deduction: $7,500
- Estimated federal tax saved: $1,650
- FICA still owed on overtime pay: $1,721 — not reduced by this deduction
Common questions
Does my night-shift differential count as overtime premium?
No. A shift differential is extra pay baked into your regular rate for working an undesirable shift — it's not the FLSA overtime premium, even though both show up as "extra money" on your paycheck.
I'm a salaried charge nurse working 55-hour weeks — do I qualify?
Only if you're classified as FLSA non-exempt. Many charge-nurse and management roles are classified as exempt, meaning no FLSA overtime pay — and no overtime premium to deduct — regardless of hours worked.