Tax Information Regarding Temporary Federal Tax Deductions for Qualified Overtime Compensation

The Postal Service recently notified the APWU that they will be sending a letter to employees regarding the tax deduction for the premium portion of Fair Labor Standards Act (FLSA) overtime that some employees may be eligible to take under the One Big Beautiful Bill Act (OBBBA).

The letter explains what portion of overtime an employee was paid in 2025 qualifies for the deduction. Overtime payments are usually larger under the National Agreement than what is required by the FLSA, so not all overtime payments qualify for the deduction.

APWU members who have questions about the amount of qualified overtime or their eligibility for a tax deduction should direct those questions to their tax professional, the IRS, or the Postal Service.

Click here to view a draft copy of the Postal Service’s letter to employees