Overtime Net Pay Calculator

How Overtime Pay Works

Under the Fair Labor Standards Act (FLSA), non-exempt employees must receive 1.5x their regular hourly rate for all hours over 40 in a workweek.
This is commonly called “time and a half.”

If your regular rate is $22/hour:
Overtime rate = $22 × 1.5 = $33/hour

Taxes on Overtime

Overtime pay is ordinary wage income, with one exception that is new.
From 2025 through 2028, US federal law lets non-exempt workers deduct the premium part of their overtime: the extra half in time and a half that the Fair Labor Standards Act (FLSA) requires.
The deduction is capped at $12,500 a year ($25,000 on a joint return), and it shrinks once income passes $150,000 ($300,000 joint).

Only the premium counts, and only overtime the FLSA itself requires. On a $22 rate, overtime pays $33, and $11 of each overtime hour is deductible. Double time paid under a state rule or a union contract does not add to it, because the FLSA asks for time and a half after 40 hours a week and nothing more.

The deduction lowers federal income tax only. Social Security, Medicare and most state income taxes still apply to the full overtime pay, and payroll withholding does not change, so the saving arrives when you file.

Taxes deducted from overtime:

• Federal income tax (at your marginal rate, on the overtime less the deductible premium)
• State income tax (varies by state, 0% in nine states)
• Social Security: 6.2%, up to an annual wage base that is indexed and rises each year ($184,500 for 2026)
• Medicare: 1.45% (no wage base limit)

Total FICA employee share: 7.65%

Example

Regular rate: $22/hour
Overtime rate: $33/hour
Overtime hours: 10 hours × 4 weeks = 40 hours
Gross OT: $33 × 40 = $1,320
Deductible premium: $11 × 40 = $440
Federal tax (22% of $1,320 − $440): $193.60
State tax (5%): $66.00
FICA (7.65%): $100.98
Total tax: $360.58
Net OT pay: $1,320 - $360.58 = $959.42
Effective after-tax OT rate: $959.42 / 40 hours = $23.99/hour

Leave the deduction out (overtime the FLSA does not require, or income well past $150,000) and federal tax is $290.40 on the whole $1,320, so the net falls to $862.62, or $21.57 an hour.

When the multiplier is not 1.5

Federal law sets 1.5x as the floor, but several states go further and the calculator handles all three common rates.

• California requires 2x beyond 12 hours in a single day, and 2x for every hour past the eighth on a seventh consecutive working day. It also pays 1.5x after 8 hours in a day, which the federal weekly rule does not.
• Alaska, Nevada and Colorado have daily thresholds of their own, so you can earn overtime in a week that never reaches 40 hours.
• Union contracts frequently beat the statutory minimum. Double time on Sundays and holidays is common in construction and healthcare, and some agreements reach 2.5x.

Enter whichever rate your paperwork actually specifies. If a shift crosses two rates, run it twice and add the results.

Note on Withholding

This is where overtime gets its unfair reputation. Your paycheck withholding may be considerably higher than your real tax liability, because most payroll systems annualise the pay period: they take the cheque in front of them, assume every future cheque will be that size, and withhold at the bracket that implies. A single big overtime week therefore gets withheld as though you earned that much all year.

The money is not lost. It comes back at filing, or it lowers what you owe. But the paycheck can look as though overtime was taxed at 40% when your actual marginal rate is 22%, and that is the origin of the persistent belief that overtime is punished by the tax code. It is not. There is no separate overtime rate anywhere in the Internal Revenue Code, and since 2025 the premium part is taxed less than the rest of your pay, not more.

The rate to enter here is your estimated marginal rate for the year as a whole, not whatever the payroll system withheld on one cheque.