Overtime is taxed at the same rates as your regular pay — there is no special, higher tax bracket for overtime. A single worker earning $25/hour keeps roughly 72%–80% of each overtime dollar after federal tax and FICA (more in a no-income-tax state, less in a high-tax one). So $375 of overtime gross (10 hours at $37.50) translates to about $300 in real take-home for a typical middle-income worker in a no-tax state.
This overtime after-tax calculator shows exactly how much of your overtime you keep in 2026 after federal income tax, Social Security, Medicare, and state tax. Enter your hourly rate, regular and overtime hours, and state rate below to see your overtime take-home for this paycheck.
The most important fact about overtime taxes is this: overtime is taxed at the same rates as your regular pay. According to the U.S. Department of Labor, the Fair Labor Standards Act (FLSA) requires non-exempt employees be paid at least 1.5× their regular rate for hours worked over 40 in a workweek — but the IRS does not have a separate, higher tax bracket for overtime. Your overtime dollars are simply added to your other wages and taxed under the same federal brackets, FICA, and state rate. The reason overtime feels taxed more heavily is that the extra income can be withheld at a higher marginal rate in the pay period you earn it.
| Component | How overtime is treated |
|---|---|
| Federal income tax | Same 2026 brackets; OT added to regular wages |
| Social Security (6.2%) | Applies to OT up to the $184,500 wage base |
| Medicare (1.45%) | Applies to all OT, no cap |
| State income tax | Same state rate as regular pay |
For example, a worker earning $25/hour who works 10 overtime hours earns $375 in overtime gross ($37.50 × 10). After federal tax, FICA, and a typical state rate, they keep roughly 70%–78% of that — the same proportion as their regular pay at that income level.
When a big overtime week hits, payroll systems often calculate withholding as if that elevated paycheck repeated every period for the whole year. That can push the withholding on that check into a higher bracket, so a larger percentage is held back. But this is only withholding, not your final tax. When you file your annual return, your true tax is computed on your actual total income — and any over-withholding from a heavy overtime period is refunded. So the higher bite you see on an overtime check is usually temporary, not a permanent higher tax on overtime.
Federal law sets the overtime premium at 1.5× (time and a half) the regular rate for hours over 40 in a workweek for non-exempt employees. Some states (such as California) add daily overtime and double-time rules. The math is straightforward: overtime rate = regular rate × 1.5. A $20/hour worker earns $30/hour in overtime; a $30/hour worker earns $45/hour. The calculator above applies the 1.5× premium, sums regular and overtime pay, annualizes the result, and applies 2026 federal tax, FICA, and your state rate to show what you actually keep.
The share of overtime you keep depends on your marginal tax rate, which combines your federal bracket, FICA (7.65%), and your state rate. The table below shows the approximate take-home percentage of an overtime dollar at different income levels for a single filer (assuming a 5% state rate):
| Annual income level | Federal marginal bracket | Approx. % of OT you keep |
|---|---|---|
| ~$30,000 | 12% | ~75% |
| ~$60,000 | 22% | ~65% |
| ~$120,000 | 24% | ~63% |
| ~$220,000 | 32% | ~54% |
In a no-income-tax state (Texas, Florida, Tennessee, Washington), add roughly 5 percentage points to each "keep" figure because there is no state tax on overtime.
Recent federal legislation created a temporary deduction for certain overtime pay. Where it applies, it can let eligible workers deduct part of the FLSA overtime premium (the "half" in time-and-a-half) from federal taxable income, subject to income limits and a cap, for tax years it is in effect. Importantly, it generally does not exempt overtime from Social Security and Medicare, and it does not change state income tax. This calculator estimates standard 2026 taxation; if you qualify for the overtime deduction, your federal tax on overtime could be lower than shown. Check IRS guidance for current eligibility and caps.
Overtime pay is always subject to FICA. Social Security tax (6.2%) applies to overtime until your total wages reach the $184,500 wage base for 2026, after which Social Security stops for the year (per the SSA). Medicare (1.45%) applies to all overtime with no cap, and an extra 0.9% Additional Medicare Tax applies to wages over $200,000. So even where the overtime deduction lowers your income tax, the 7.65% FICA generally still applies to your overtime earnings.
Consider a single worker paid $25/hour, biweekly, who works 80 regular hours plus 10 overtime hours in a pay period:
| Item | Amount |
|---|---|
| Regular pay (80 × $25) | $2,000 |
| Overtime pay (10 × $37.50) | $375 |
| Gross this paycheck | $2,375 |
| Approx. take-home (single, 5% state) | ~$1,800 |
| Of which, OT kept after tax | ~$270 (about 72% of $375) |
The overtime adds roughly $270 of real spendable income to this paycheck. Working more overtime hours scales this proportionally, with the take-home percentage easing slightly as additional income is withheld at higher marginal rates within the period.
Whether a salaried employee qualifies for overtime depends on their FLSA classification. Non-exempt salaried employees are entitled to overtime; exempt employees (meeting the duties and salary-threshold tests) generally are not. If you are non-exempt and salaried, your regular rate for overtime is your weekly salary divided by the hours it is intended to cover. The Department of Labor sets the salary threshold for exemption; if your salary is below it, you are likely entitled to overtime regardless of title.
Because overtime is taxed like regular pay, the best way to keep more of it is to manage your overall tax picture: contribute to a pre-tax 401(k) or HSA to lower taxable income, ensure your W-4 reflects your real situation so you are not over-withheld, and (if eligible) claim the overtime deduction when you file. There is no way to make overtime "tax-free" through FICA, but smart withholding and pre-tax saving ensure you keep the maximum after-tax value of every extra hour worked.
Your state rate directly affects overtime take-home. In the nine no-income-tax states, you keep the full state share of overtime — only federal tax and FICA apply. In high-tax states like California, Minnesota, or Maryland (with local tax), a larger slice of overtime goes to state and local income tax. Enter your state rate in the calculator (0 for no-tax states) to see your exact overtime after-tax amount.
Because overtime is folded into your total wages, it appears on your W-2 in Box 1 alongside regular pay — there is no separate "overtime" box. When you file your annual return, the IRS computes your tax on your total income, then compares it to what was withheld. If heavy overtime periods caused over-withholding, you receive the excess as a refund; if you under-withheld, you owe the difference. This is why two workers with identical annual income pay identical income tax regardless of how much of that income came from overtime versus regular hours. The timing of overtime affects withholding within the year, never your final tax liability.
State income tax has a direct, predictable effect on overtime take-home. In the nine no-income-tax states — Texas, Florida, Tennessee, Washington, Nevada, South Dakota, Wyoming, Alaska, and New Hampshire (no wage tax) — only federal tax and FICA touch your overtime, so you keep the largest share. In California, where the top marginal rate exceeds 9%, a high earner keeps noticeably less of each overtime dollar. The table shows approximate take-home on a $375 overtime amount for a single worker around $65,000 income:
| State | State rate applied | Approx. OT kept (of $375) |
|---|---|---|
| Texas / Florida / Tennessee | 0% | ~$300 (80%) |
| Arizona | 2.5% | ~$291 (78%) |
| Colorado | 4.40% | ~$284 (76%) |
| California (mid bracket) | ~6% | ~$278 (74%) |
Some employers and some states (notably California) require double time (2× the regular rate) for hours beyond a daily threshold or on the seventh consecutive workday. Holiday premium pay is generally a matter of company policy, not federal law. Like overtime, double-time and holiday premium pay are taxed exactly like regular wages — added to your income and subject to federal tax, FICA, and state tax. A $25/hour worker earning double time makes $50/hour for those hours, and keeps the same percentage after tax as any other wages at that income level.
Because overtime is never taxed at a punitive rate, working overtime almost always increases your take-home — you keep the majority of every extra dollar. The main considerations are non-financial: the value of your time, fatigue, and whether overtime affects benefits. Financially, even at the 24% federal bracket plus FICA and a 5% state, you keep over 60% of overtime pay. The myth that "overtime isn't worth it because of taxes" is false; the higher withholding on a big check is refunded at filing. Use the calculator to see your real overtime take-home before deciding.
Your pay stub should itemize regular hours at your base rate and overtime hours at 1.5× separately. Verify that overtime hours over 40 in a workweek are paid at the premium rate, and that the rate equals exactly 1.5 times your regular hourly rate (including, in some cases, shift differentials and non-discretionary bonuses in the "regular rate" calculation under FLSA rules). If your stub lumps overtime into regular pay or applies the wrong multiplier, you may be underpaid. The Department of Labor's Wage and Hour Division enforces these rules and provides complaint avenues for unpaid overtime.
No. Overtime is taxed at the same federal, state, and FICA rates as regular pay. There is no separate, higher tax bracket for overtime. It can appear taxed more heavily because a large overtime check may be withheld at a higher marginal rate, but any over-withholding is refunded when you file.
Most workers keep roughly 54% to 78% of overtime pay after taxes, depending on income level and state. A single worker around $60,000 in a 5% state keeps about 65% of an overtime dollar; in a no-income-tax state it is closer to 70%.
Under federal law, overtime is paid at 1.5 times (time and a half) the regular rate for hours over 40 in a workweek for non-exempt employees. A $25/hour worker earns $37.50 per overtime hour. Some states add daily overtime or double-time rules.
Not entirely. A temporary federal deduction may let eligible workers deduct part of the overtime premium from federal taxable income, subject to income limits and a cap. It generally does not exempt overtime from Social Security and Medicare, and it does not affect state income tax.
Yes. Overtime is subject to FICA: 6.2% Social Security up to the $184,500 wage base for 2026, and 1.45% Medicare on all overtime with no cap, plus 0.9% additional Medicare on wages over $200,000.
Payroll systems often withhold as if your elevated overtime paycheck repeated all year, pushing that check into a higher withholding bracket. This is temporary withholding, not your final tax. When you file, your real tax is based on actual total income and excess withholding is refunded.