How it works
Overtime pay. Under the Fair Labor Standards Act (FLSA), non-exempt employees must be paid at least one and a half times their regular rate for hours worked over 40 in a workweek (U.S. Department of Labor, FLSA). The calculator splits your hours into regular hours (up to 40) and overtime hours (over 40) and applies the overtime rate you choose. Exempt employees, such as many salaried managers and professionals, are not covered by this rule.
State daily overtime. Some states have their own overtime rules on top of the federal one. California, for example, also requires overtime pay for hours over a daily limit and double time in some cases (California Department of Industrial Relations, Labor Commissioner's Office). This calculator applies the federal weekly rule; if your state counts overtime by the day, your paycheck can include more overtime hours than shown here.
Taxes on the paycheck. Overtime pay is wages, so federal income tax withholding, Social Security (6.2% up to the $184,500 wage base) and Medicare (1.45%) apply to it, along with state income tax where your state has one. Federal withholding follows IRS Publication 15-T (2026); Social Security and Medicare follow IRS Publication 15 (Circular E) (2026), with the wage base set by the SSA. State tax follows your state's revenue department tables for 2026.
No tax on overtime (federal deduction). The One Big Beautiful Bill Act, signed in 2025, created a federal income tax deduction for qualified overtime compensation for tax years 2025 through 2028 (IRS). Qualified overtime compensation is the premium part of overtime pay required by the FLSA — the "half" in time and a half — not the whole overtime paycheck. The deduction is capped at $12,500 per year, or $25,000 for married couples filing jointly, and it is reduced when modified adjusted gross income is above $150,000 ($300,000 for joint filers) (IRS, 2026). It lowers federal income tax only; Social Security, Medicare and state taxes still apply unless a state has its own rule.
The deduction is claimed on the annual federal return. The calculator shows it as a separate yearly estimate. The per-paycheck withholding line follows IRS guidance for 2026 withholding (IRS Publication 15-T (2026) and Form W-4 (2026)) None by default: overtime stays subject to income tax withholding and FICA; employee may reflect the expected deduction via Form W-4 Step 4(b) (FS-2026-13 Q8-Q9)., so the take-home figure and the deduction estimate are not added together.
Worked example
Say you earn $20 an hour, work 46 hours in one week, are paid weekly, file as single and live in Texas. Regular pay is 40 × $20 = $800. Overtime pay is 6 × $30 = $180 at time and a half. Gross pay for the week is $980.
Of the $180 overtime pay, $60 (6 hours × the $10 half-time premium) is qualified overtime compensation for the federal deduction.
The calculator estimates federal income tax withholding of $75.68, Social Security of $60.76 and Medicare of $14.21. Texas has no state income tax (Texas Comptroller, 2026), so take-home pay for the week is $829.35.
With overtime in 20 weeks of the year, the yearly qualified overtime premium is $1,200.00, and the estimated federal deduction is $1,200.00, which lowers federal income tax on the annual return by about $144.00.
Frequently asked questions
How is overtime pay calculated?
Hours over 40 in a workweek are paid at least one and a half times the regular rate for non-exempt employees under the FLSA (U.S. Department of Labor). Multiply the overtime hours by your hourly rate times 1.5 and add the regular pay.
Is overtime taxed more than regular pay?
No. Overtime is taxed as ordinary wages. A larger paycheck can have a larger share withheld because withholding tables treat each paycheck as if it were your usual pay (IRS Publication 15-T (2026)).
Is there no tax on overtime in 2026?
For tax years 2025 through 2028, a federal deduction covers qualified overtime compensation up to $12,500 ($25,000 joint), phased out above $150,000 of modified adjusted gross income (IRS). It reduces federal income tax, not Social Security, Medicare or state tax.
Does the overtime deduction cover all of my overtime pay?
No. It covers the premium part required by the FLSA, the extra half in time and a half, not the regular-rate part of the overtime hours (IRS).
Does California pay daily overtime?
Yes. California requires overtime for hours over a daily limit as well as over 40 a week, and double time in some cases (California Department of Industrial Relations). This calculator applies the federal weekly rule.
Do salaried employees get overtime?
Salaried employees who are non-exempt under the FLSA are owed overtime; exempt employees are not. Whether a job is exempt depends on its duties and salary level (U.S. Department of Labor, FLSA).