Understanding Overtime Pay
Overtime pay is a critical consideration for hourly workers who regularly work more than 40 hours per week. The Fair Labor Standards Act (FLSA) requires employers to pay non-exempt employees at least 1.5 times their regular hourly rate for hours worked over 40 in a workweek. This calculator shows how overtime affects your take-home pay after taxes.
How Overtime Pay is Calculated
When you work overtime, your employer must pay you time-and-a-half (1.5x) your regular rate for each hour over 40 in a workweek. For example, if your regular rate is $20 per hour, overtime hours are paid at $30 per hour. This means that a 50-hour workweek would include 40 hours at your regular rate and 10 hours at the overtime rate. The overtime premium can significantly increase your gross pay, but it also pushes you into higher tax brackets, affecting your net take-home amount.
Tax Implications of Overtime
On your paycheck, overtime is withheld on like regular pay. Because it increases your total income, it can push part of your earnings into a higher bracket, which is most noticeable when overtime is steady through the year. The calculator applies federal income tax, state income tax (where applicable), and FICA (Social Security and Medicare) to your total earnings, including the overtime premium.
The Federal Overtime Deduction (2025–2028)
On your tax return, overtime is now treated differently. For tax years 2025 through 2028, the 2025 tax law lets you deduct qualified overtime, the extra half of time-and-a-half that the FLSA requires, up to $12,500, or $25,000 married filing jointly. It phases out above $150,000 of income ($300,000 joint), it doesn't reduce Social Security or Medicare, and unless you claim it on your W-4 it arrives as a bigger refund rather than a bigger paycheck. From 2026 your W-2 reports the deductible amount in box 12 with code TT. The No Tax on Overtime Calculator prices it on your whole return.
Why Overtime Take-Home Pay Differs
While overtime pay is taxed at higher rates due to increased annual income, you still take home significantly more than regular hours. However, the percentage of overtime pay that reaches your bank account may be slightly lower than regular hours due to progressive tax brackets. The calculator above shows how much of each overtime dollar you take home after federal income tax, state income tax, and FICA.
Using an Overtime Calculator
Enter your regular hourly rate, your regular hours per week, and your overtime hours per week. The calculator pays the overtime hours at 1.5 times your rate, projects your annual income, applies federal, state, and FICA taxes, and shows your estimated take-home pay along with how much the overtime adds per year. That tells you whether the extra hours are worth it after taxes and any other costs.
Note: Overtime rules vary by state and employment agreement. Some states require daily overtime (for example, after 8 hours in a day), while others follow federal guidelines. Consult your employer or labor department for specific rules applicable to your situation.