🦍 OBBB Q&A: Can S-Corp Owners Score the New Overtime Deduction?
Short answer: Not unless you want the IRS swinging through your payroll like a gorilla on a vine.
But for everyone else in your business? Maybe! Let’s break it down.
🕰️ Why S-Corp Owners Usually Don’t Qualify
The “No Tax on Overtime” deduction from OBBB sounds awesome, but there’s a catch:
It only applies to employees protected by the Fair Labor Standards Act (FLSA).
And if you’re an S-Corp owner paying yourself hourly, the IRS isn’t fooled. They know you control your own schedule, approve your own hours, and (let’s be honest) probably picked your own business card font.
Result: No deduction for your own OT.
🦍 But Wait! What About Your Spouse, Kid, or Admin?
Here’s where you might get the bananas:
If your spouse or another officer…
Doesn’t own the business
Doesn’t control their own pay or schedule
Works a real job (think: ops, front desk, billing, customer support)
Is paid hourly, clocking legit overtime
Uses a third-party payroll provider
And you’ve got it all documented…
Then yes, you might qualify for the new overtime deduction — even if they’re an “officer” on paper.
🧾 Key Factors to Make the Deduction Stick
They’re not a shareholder
They don’t sign their own paychecks
They don’t approve their own hours
All hours, roles, and pay are documented (seriously — write it down!)
You’re using real payroll, not just handing over bananas
🎯 Real-Life Example
Let’s say:
Your spouse is your office manager — not an owner, not on the board
You pay them hourly, they work real overtime during the busy season
You use Gusto, ADP, or another third-party payroll system
All hours are clocked and payroll is by the book
Congratulations! You might save $3,000–$6,000 per year in federal taxes, plus a payroll tax deduction.
But if they’re co-owners or have signing authority? Don’t try it — unless you want the IRS to go full King Kong on your business.
🦔 How Hedgi Makes It Easy
Hedgi tracks overtime pay and flags if you’re on track for the deduction
All roles and relationships are memo’d and documented in your ledger
If there’s a risk of audit, Hedgi’s AI can flag “owner/officer” relationships for you
đź“ť Bottom Line
S-Corp owners: Sorry, you’re not cashing in on your own OT
Spouse, kid, or admin: If they don’t own or control the company, document everything — and enjoy the new deduction!
Let Hedgi keep you out of trouble and help you claim every legal OBBB win.
Sign up for early access and let the gorillas handle the IRS jokes.