How overtime pay is calculated
Federal law sets the minimum overtime rate at one and a half times your regular rate of pay for every hour over 40 in a workweek. This calculator multiplies your hourly rate by your chosen multiplier and by overtime hours, adds regular pay, and then projects the result across the number of weeks you enter.
Weekly pay = (rate × regular hours) + (rate × multiplier × overtime hours)
Example: a worker earning $22 an hour who works 48 hours a week earns $880 in regular pay and $264 in overtime, for $1,144 gross. Over 52 weeks that is $59,488, of which $13,728 is overtime pay.
How much of your overtime do you keep?
Overtime is taxed at your marginal rate, which is the rate on the last dollars you earn. For the example above, a single filer in Texas takes home about $11,030 of the $13,728 in extra annual pay, or roughly 80%. The rest goes to federal income tax and 7.65% FICA. In a higher-tax state the share kept is lower. Use the form above to test your own state and filing status.
Why a big overtime check looks heavily taxed
Payroll software assumes each paycheck repeats all year. A $1,144 weekly check annualizes to roughly $59,500, so withholding is calculated as if that were your salary. If you only work overtime occasionally, the withholding is higher than your true tax rate and the difference returns to you as part of your refund. This is the same effect described in our guide to bonus taxes.
The 2025–2028 federal overtime deduction
The One Big Beautiful Bill Act created a temporary deduction for “qualified overtime compensation.” Only the premium portion that is above your regular rate counts, so for time-and-a-half it is the extra half. The maximum deduction is $12,500 ($25,000 for married couples filing jointly). It starts phasing out by $100 for each $1,000 of modified adjusted gross income above $150,000 ($300,000 joint). You need a valid Social Security number, and the overtime must be required by the FLSA. When the result above shows a deduction amount, the savings estimate is the reduction in your federal income tax from claiming it. It is not a reduction in withholding; you claim it when you file.
Overtime rules to know
- Workweek, not pay period. Overtime is calculated per fixed 168-hour workweek, not averaged over two weeks.
- Regular rate includes more than base pay. Non-discretionary bonuses, shift differentials and commissions generally must be included in the regular rate.
- State rules can be stricter. California requires daily overtime after 8 hours and double time after 12; Alaska and Nevada have daily rules too; Colorado requires overtime after 12 hours a day.
- Exempt status depends on duties and salary, not on whether you are paid a salary.
Read the full overtime rules guide, or convert hourly pay with the hourly to salary calculator.