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The deduction is capped at $12,500 for individuals

By Mark Huffman of ConsumerAffairs

• The IRS has clarified that no tax on overtime is a deduction, not a blanket exemption from federal taxes on overtime wages.

• Generally, only the premium portion of overtime required under the Fair Labor Standards Act qualifies such as the extra half in time-and-a-half pay.

• The deduction is capped at $12,500 for individuals and $25,000 for married couples filing jointly, with benefits phasing out at higher incomes.

The Internal Revenue Service has issued new guidance clarifying how the federal no tax on overtime provision works, spelling out which workers and wages qualify for the new tax break and addressing a potentially confusing point: The law does not make all overtime earnings tax-free.

The IRS has updated its frequently asked questions on the deduction for qualified overtime compensation, replacing guidance released in January. The agency said the revisions clarify the deductions limits and timing, Fair Labor Standards Act coverage and employer reporting requirements.

Under the provision, taxpayers can deduct up to $12,500 in qualified overtime compensation each year, or up to $25,000 for married couples filing jointly. The deduction begins to phase out when modified adjusted gross income exceeds $150,000 for an individual or $300,000 for a joint return.

What no tax on overtime actually means

Despite the shorthand name, workers cannot simply subtract all of their overtime wages from their taxable income.

Qualified overtime generally means the amount paid above a workers regular rate that is required by Section 7 of the Fair Labor Standards Act. For a worker receiving the standard time-and-a-half overtime rate, that generally means the additional one-half portion qualifies for the deduction not the workers entire overtime paycheck.

For example, suppose a worker normally earns $20 an hour and receives $30 an hour for FLSA-required overtime. Generally, the $10 overtime premium is the portion that could count as qualified overtime compensation for the deduction.

There is another important restriction: Overtime that is not required by the FLSA does not qualify simply because an employer calls it overtime. The IRS says an employee who isn't eligible for overtime under the FLSA doesn't receive qualified overtime compensation even if another arrangement, such as a collective bargaining agreement, provides overtime pay.

Taxes can still come out of overtime paychecks

Workers also shouldn't expect qualifying overtime to automatically disappear from their taxable wages on each paycheck.

The IRS says qualified overtime remains subject to federal income tax withholding. Employers generally cannot reduce withholding because of the deduction unless an employee submits an updated, valid Form W-4 that accounts for the expected overtime deduction. Overtime compensation also generally remains subject to employment taxes such as Social Security and Medicare taxes.

That distinction makes the provision more accurately described as an income-tax deduction for certain overtime compensation rather than a complete exemption from taxation.

Reporting rules get stricter for 2026

The IRS also clarified how workers will document the deduction.

Special transition relief applied for the 2025 tax year because employers weren't generally required to separately report qualified overtime compensation. Beginning with tax year 2026, however, the IRS says an employee generally can deduct qualified overtime only when the employer includes the amount on a properly furnished Form W-2. The IRS guidance gives an example of qualified overtime being reported in Box 12 using code TT.

The deduction is available whether taxpayers itemize or take the standard deduction. Married taxpayers must file jointly to claim it, and the worker receiving the qualified overtime must have a Social Security number valid for employment.

The provision applies to tax years 2025 through 2028.

Eligible customers could receive an average of about $100 per vehicle

By Mark Huffman of ConsumerAffairs

• State Farm has begun distributing its record $5 billion dividend to eligible auto insurance customers, with payments being sent in waves by state.

• Customers generally qualify if they had an eligible State Farm Mutual personal auto policy at any point during 2025 and their calculated dividend is more than $10.

• Payments vary by state and premiums paid, ranging from roughly 4% to 10% of 2025 premiums, with State Farm estimating an average of about $100 per insured vehicle.

State Farm has started returning billions of dollars to its auto insurance customers, and some policyholders are now receiving their share.

The insurer is distributing a one-time $5 billion dividend, the largest policyholder dividend in State Farm's history. The company announced the payment in February after stronger-than-expected financial results in its auto insurance business during 2025. Distribution began this summer and is expected to continue in waves over several months.

The dividend applies to more than 49 million vehicles insured by State Farm Mutual Automobile Insurance Company. State Farm says the average payment will be about $100 per vehicle, although the amount individual customers receive can be considerably higher or lower.

Who qualifies for the State Farm dividend?

According to State Farm, customers qualify if they had an eligible private passenger auto insurance policy issued by State Farm Mutual that was active at any point between Jan. 1 and Dec. 31, 2025. State Farm's FAQ specifies that a customer's calculated dividend must be more than $10.

Customers do not need to still be insured by State Farm to receive the money. Someone who had an eligible State Farm Mutual auto policy during 2025 but has since switched insurers can still qualify.

The dividend is specifically tied to State Farm Mutual's auto insurance results. Customers with only homeowners, renters, life or other types of State Farm insurance aren't eligible on the basis of those policies.

Eligibility details can vary somewhat by state. For example, Louisiana regulators said the dividend there applies to State Farm Mutual Private Passenger Auto Voluntary Preferred policies that were in force on Dec. 31, 2025. Georgia regulators similarly described eligible policies as Private Passenger Auto Voluntary Preferred policies.

How much will policyholders receive?

State Farm says dividends are calculated as a percentage of the auto premiums a customer paid in 2025. That percentage ranges from 4% to 10%, depending on the state.

That means there isn't a universal $100 check for every customer. The approximately $100 figure is an average per vehicle.

State regulators have already disclosed significant differences. Louisiana customers, for example, are expected to receive an average of about $138 per vehicle, while qualifying Georgia drivers are expected to average roughly $135 per vehicle. In Washington, D.C., the average is approximately $173 per vehicle.

State Farm says the percentage varies because each state's results contributed differently to the company's nationwide underwriting performance in 2025.

How the money will arrive

Customers shouldn't necessarily be watching only their mailbox.

Policyholders with an email address registered with State Farm will receive an email with instructions from payment administrator Veritas directing them to a payment portal, where they can select a digital payment or a check. Customers without an email address on file will automatically receive a physical check through the mail.

The payments are being released in waves based on the state where the policy is assigned, so one State Farm customer may receive a payment weeks or even months before another. State Farm says processing payments covering more than 49 million vehicles will take several months.

The company says the dividend is possible because of its financial strength and stronger-than-expected underwriting performance in 2025. State Farm has also been reducing auto insurance rates in dozens of states, saying reductions across 40 states are saving customers about $4.6 billion annually.

Customers who believe they qualify but haven't heard from State Farm can check their status through State Farm's dividend website, contact their State Farm agent or call the dividend information line at 1-888-808-9532.

The products were sold nationwide

By Mark Huffman of ConsumerAffairs

• Dreyers Grand Ice Cream is recalling certain Outshine fruit bars because they may contain pieces of glass.

• The recall covers select batches of five flavors sold in 6-count, 2.5-ounce packages: Strawberry, Grape, Watermelon, Black Cherry and Tangerine.

• No illnesses or injuries have been reported, but consumers should throw away affected products or return them to the store for a full refund.

Consumers with Outshine fruit bars in their freezers should check the packaging after the manufacturer announced a recall over possible glass contamination.

Dreyers Grand Ice Cream Inc. is voluntarily recalling a limited number of Outshine Fruit Bars after determining that certain products could contain foreign material, specifically glass, according to an Aug. 16 recall notice.

The affected products are limited to five flavors of Outshine 6-count, 2.5-ounce fruit bars:

• Strawberry

• Grape

• Watermelon

• Black Cherry

• Tangerine

No other Outshine products or varieties are included in the recall, the company said.

How to tell if your Outshine bars are recalled

Not every package of the five flavors is affected. Consumers need to check the batch code and best-before date printed on the bottom of the package.

The recalled Strawberry bars have UPC 041548610047, while Grape bars have UPC 041548244044, Watermelon bars have UPC 041548000121 and Tangerine bars have UPC 041548612041. Multiple batch codes and best-before dates are included in the recall, so shoppers should compare the code on their package with the company's complete recall list.

Affected products have best-before dates extending into 2027.

Consumers who have one of the recalled packages should not eat the fruit bars. Dreyers said they should either dispose of the product or return it to the retailer where it was purchased for a full refund.

No injuries have been reported

As of the recall announcement, Dreyers said it had received no reports of illnesses or injuries connected with the affected fruit bars. Anyone who believes they may have been injured should contact a health care provider.

Foreign objects such as glass can pose a risk of cuts or other injuries if they are swallowed.

Dreyers said the recall is limited to the specified batches and that its other Outshine products are not affected.

The safety, quality, and integrity of our products remain our highest priority, the company said in its announcement.

Consumers with questions about the recall can contact Dreyers Grand Ice Cream at dreyers@casupport.com.

The airline is also adding more premium seats, Bluetooth entertainment and USB-C charging

By Mark Huffman of ConsumerAffairs

• American Airlines plans to install seatback entertainment screens at every seat across its narrowbody fleet, including 4K displays, Bluetooth audio and USB-C charging.

• The airline is also expanding premium seating, with premium and Main Cabin Extra seats expected to grow from about 25% of narrowbody seats today to roughly 40% in the coming years.

• New Airbus and Boeing aircraft will begin arriving with the screens in 2028, while existing planes will be retrofitted, with the fleetwide installation expected to be finished early next decade.

American Airlines passengers will soon have another option for passing the time in the air: watching movies and TV directly from the seat in front of them.

The airline announced a major overhaul of its narrowbody fleet that will put seatback entertainment screens at every seat while substantially increasing the number of premium and extra-legroom seats available to travelers.

The investment represents a notable shift for American, which has relied heavily on passengers streaming entertainment to their own phones, tablets and laptops on many domestic flights.

Were making one of the most significant investments in the onboard experience in our history, American Chief Customer Officer Heather Garboden said in announcing the changes.

What travelers can expect from the new screens

American said its next-generation entertainment system will include some of the largest seatback displays available on narrowbody aircraft in North America. The screens will support 4K video and offer movies, television, music and games.

Passengers will also be able to pair their own wireless headphones and earbuds with the screens using Bluetooth. USB-C fast-charging ports will be available at every seat.

American also plans to make the entertainment system more personalized, including recommendations for movies and shows as well as enhanced interactive flight maps with destination information and real-time details about the flight.

The airline already has seatback screens on more than 140 long-haul aircraft. Starting in 2028, all newly delivered Airbus and Boeing aircraft will come with the new displays, while American will retrofit aircraft already in its narrowbody fleet. The carrier expects the fleetwide installation to be completed by early next decade.

American is adding more premium seats, too

The screens aren't the only significant cabin change.

American said premium seating currently accounts for about 25% of the seats on its narrowbody departures. It plans to increase that figure to approximately 40% in the coming years through aircraft retrofits and new deliveries.

The airline is already adding an additional row of First Class seats to its Airbus A319 and A320 aircraft. Its future Boeing 737 MAX 10 aircraft are slated to have 24 First Class seats, while American also plans to reconfigure its A321neo fleet with additional First Class seating.

Most of the narrowbody fleet will also receive additional Main Cabin Extra seats, which offer more legroom along with benefits such as earlier boarding and dedicated overhead-bin space.

Cabins will receive other updates including redesigned seats, additional storage and enhanced lighting.

Part of a larger overhaul of the flying experience

The upgrades are part of a broader effort by American to improve its onboard product and compete for travelers willing to pay more for premium experiences.

The carrier previously announced plans to install SpaceX's Starlink internet service on more than 500 narrowbody aircraft beginning in the first quarter of 2027. Starlink is designed to support bandwidth-heavy activities including streaming, gaming and video calls.

American is also investing in new and expanded Admirals Club and Flagship lounges, upgrading food and beverage offerings and introducing digital tools intended to make booking, baggage tracking and other parts of a trip easier.

For passengers, the combined upgrades could make American's domestic flights look considerably different over the next several years. Instead of choosing between using a personal device or going without a screen, every passenger would eventually have built-in entertainment along with faster connectivity and more opportunities to pay for additional space.