Overtime Tax Calculator
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Find out exactly how much of your overtime pay you keep after federal tax, FICA, and state tax, using 2026 IRS brackets.
Quick answer: Overtime isn't taxed at a special rate. It's added to your income and taxed at your marginal bracket, like any other pay. A single filer earning $55,000 plus $15,000 overtime sees only the top slice cross into the 22% bracket, for a 29.65% marginal rate; blended across the full $15,000, they keep about 78 cents per overtime dollar.
Based on 2026 federal brackets. FICA: 6.2% SS (wage base $184,500) + 1.45% Medicare. Estimate only.
How to Use the Overtime Tax Calculator
Enter your hourly rate and hours
Input your regular hourly rate, regular hours per week, and overtime hours per week. Adjust the OT multiplier if your employer pays more than standard 1.5×.
Set filing status and state rate
Select single, married filing jointly, or head of household. Enter your state income tax rate (0% for TX, FL, WA; up to 13.3% for CA).
Add pre-tax deductions
Include monthly 401(k) or HSA contributions, which reduce taxable income and lower the effective tax on your overtime earnings.
Review your take-home and marginal rate
The result shows weekly OT net pay, the combined marginal rate on overtime, and your annual totals with and without overtime.
Compare with the federal overtime deduction
The 2026 "No Tax on Overtime" deduction is applied by default. Uncheck the box above the results to see your take-home without it and compare the difference.
How Is Overtime Pay Taxed?
Overtime pay is not taxed at a special punitive rate. It is taxed at your marginal income tax bracket, the same rate that applies to the last dollar of your regular pay. The confusion arises because overtime increases your total annual income, which can push more of your earnings into a higher bracket. But critically, only the income above a bracket threshold is taxed at the higher rate, not your entire paycheck. If you need your gross overtime pay first, before any tax, use the Overtime Calculator.
For example: a single filer earning $55,000 in regular wages has $38,900 in taxable income after the 2026 standard deduction ($16,100), placing them in the 12% federal bracket. Overtime earnings of $15,000 push taxable income to $53,900: the first $11,500 of that overtime still falls in the 12% bracket, and only the remaining $3,500 crosses into the 22% bracket, for a 29.65% marginal rate (22% federal + 7.65% FICA) on that top slice. Blended across the whole $15,000, federal tax plus FICA works out to about 22% overall, so they keep roughly 78 cents of every overtime dollar.
Why Does My Overtime Check Look So Small?
Employers must withhold taxes from every paycheck. For supplemental wages like overtime, the IRS gives them two options: the flat rate method (22% federal withholding on overtime) or the aggregate method (withhold as if the combined amount were your regular rate). Either can look harsh on your pay stub, but withholding is just an advance payment. Your actual tax liability is settled at year-end when you file. Over-withholding comes back as a refund.
The Overtime Tax Formula
📐 Overtime Tax Formula
Federal Tax on OT = OT Taxable × Marginal Bracket Rate
FICA on OT = OT Gross × 7.65%
OT Net Take-Home = OT Gross − Federal − FICA − State
2026 Federal Income Tax Brackets, All 3 Filing Statuses
This calculator's own bracket data, in full, for whichever filing status you select above:
| Taxable Income (Single) | Marginal Rate |
|---|---|
| $0 – $12,400 | 10% |
| $12,401 – $50,400 | 12% |
| $50,401 – $105,700 | 22% |
| $105,701 – $201,775 | 24% |
| $201,776 – $256,225 | 32% |
| $256,226 – $640,600 | 35% |
| Over $640,600 | 37% |
| Taxable Income (Married Filing Jointly) | Marginal Rate |
|---|---|
| $0 – $24,800 | 10% |
| $24,801 – $100,800 | 12% |
| $100,801 – $211,400 | 22% |
| $211,401 – $403,550 | 24% |
| $403,551 – $512,450 | 32% |
| $512,451 – $768,700 | 35% |
| Over $768,700 | 37% |
| Taxable Income (Head of Household) | Marginal Rate |
|---|---|
| $0 – $17,700 | 10% |
| $17,701 – $67,450 | 12% |
| $67,451 – $105,700 | 22% |
| $105,701 – $201,750 | 24% |
| $201,751 – $256,200 | 32% |
| $256,201 – $640,600 | 35% |
| Over $640,600 | 37% |
Standard deduction 2026: $16,100 (single), $32,200 (married filing jointly), $24,150 (head of household).
How to Reduce Tax on Overtime Pay
- Increase 401(k) contributions. Traditional 401(k) contributions reduce taxable income dollar-for-dollar. In 2026, the limit is $24,500 ($32,500 if 50+). If overtime pushes you into the 24% bracket, an extra $5,000 contribution saves $1,200 in federal tax. Use the 401(k) Calculator to model how a higher contribution rate affects your long-term balance.
- Health Savings Account (HSA). If you have a high-deductible health plan, 2026 HSA limits are $4,400 (individual) or $8,750 (family), all pre-tax.
- Flexible Spending Account (FSA). Healthcare and dependent care FSAs reduce taxable wages. Maximize before overtime season starts.
- Time large deductions. If you itemize, concentrate deductible expenses in years with high overtime income to maximize benefit.
The 2026 "No Tax on Overtime" Deduction
Starting with tax year 2025, the One Big Beautiful Bill Act (OBBBA) created a new federal deduction for the FLSA overtime premium: the extra half of "time-and-a-half," not your whole overtime paycheck. If you earn $30/hour in overtime at a 1.5× multiplier on a $20/hour base rate, only the $10/hour premium portion qualifies, not the full $30.
The deduction is capped at $12,500 (single or head of household) or $25,000 (married filing jointly) per year, and phases out once modified adjusted gross income (MAGI) passes $150,000 (single/HOH) or $300,000 (MFJ), reduced $100 for every $1,000 of MAGI over the threshold, reaching $0 at $275,000/$550,000. It's an above-the-line deduction, so you get it whether or not you itemize, but it only lowers federal income tax: it does not reduce FICA (Social Security/Medicare) or state income tax, and it's temporary, running through tax year 2028. Starting with tax year 2026, employers report qualified overtime compensation on Form W-2, box 12, code TT. The calculator above applies this deduction automatically (uncheck the box to compare your take-home without it); source: IRS.gov.
How Much Does the Deduction Actually Save? (Single Filer, $10,000 Overtime at 1.5×)
The deduction's dollar value depends on your regular wages, since federal tax is progressive. Using a fixed $10,000 in overtime gross (of which $3,333 is the deductible FLSA premium at a standard 1.5× multiplier):
| Regular Wages | Federal Tax Without Deduction | Federal Tax With Deduction | Annual Federal Savings |
|---|---|---|---|
| $40,000 | $3,820 | $3,420 | $400 |
| $60,000 | $6,570 | $5,837 | $733 |
| $90,000 | $13,170 | $12,437 | $733 |
| $130,000 | $22,334 | $21,534 | $800 |
Savings grow with your bracket, since the same $3,333 deduction is worth more in a higher marginal bracket, up to the point where MAGI approaches the $150,000 phaseout threshold. FICA and state tax are unaffected by this deduction either way.
Who Qualifies for the "No Tax on Overtime" Deduction?
You must be non-exempt under the FLSA, meaning you're legally entitled to the statutory 1.5× overtime premium in the first place. Most executive, administrative, professional, outside sales, and other FLSA-exempt salaried employees don't qualify, even if their employer voluntarily pays them something labeled "overtime." Independent contractors and gig workers generally don't qualify either: charging a higher rate for extra hours isn't the same as the statutory FLSA overtime premium, since 1099 income falls outside the deduction's design. A business owner with a 20%+ equity stake actively involved in management is typically treated as an exempt executive, so their own overtime pay usually doesn't qualify. If you're unsure whether you're non-exempt, check your last pay stub: non-exempt employees generally see overtime hours and rate broken out separately on each check.
Is Overtime Worth It Financially?
In almost every scenario, yes. Even in the 22% federal bracket with a 5% state rate, the combined marginal rate on overtime is roughly 35%. That means for every $100 of overtime gross, $65 is take-home: a positive return with zero investment risk. Where overtime becomes less attractive is for high earners crossing into the 32–35% bracket in high-tax states (California top rate: 13.3%), where combined rates can exceed 50%. In those cases, 401(k) deferrals become essential.
Working in South Africa? Overtime taxation under SARS operates differently. South African employees are taxed on total remuneration using progressive PAYE brackets, and employer deductions for UIF and SDL also apply to overtime earnings. PayTools provides South African-specific salary, PAYE, and net pay calculators that handle overtime correctly under SA tax law.
Why Does Overtime Pay Get Taxed at a Higher Rate?
It doesn't. Withholding tables make it look that way. Consider a paycheck with $1,200 of regular pay and $400 of overtime in the same period, for someone in the 22% federal marginal bracket. Payroll systems commonly use an "aggregate" withholding method that applies the withholding rate for the combined paycheck amount to the whole check. Because the larger total pushes more of that period's income into the higher withholding bracket, the overtime portion appears to be taxed unusually hard, even though your annual tax bill is based on total yearly income, not on which paycheck the money arrived in.
What is a rough estimate of the extra withholding on that $400?
Applying the marginal rate (22%) plus FICA (7.65%) to the $400 of overtime: $400 × (0.22 + 0.0765) = $118.60 withheld, leaving about $281.40 net from that portion of the check. The FICA share (7.65%) is a real, permanent tax; the 22% income-tax withholding is a prepayment reconciled at filing; if your total annual income keeps you in the 22% bracket, that portion is correct; if the extra overtime pushes only that pay period's marginal calculation higher than your true annual rate, part of the withholding comes back as a refund.
Is It Worth Taking Extra Overtime Once Taxes Are Considered?
Can overtime push you into a higher tax bracket?
Only the income within the new bracket is taxed at the higher rate: brackets are marginal, not applied to your whole income retroactively. Someone earning $47,000 in regular wages who works enough overtime to reach $52,000 pays 12% up to the 2026 threshold of $50,400, and 22% only on the roughly $1,600 above it, not 22% on the full $52,000. The blended, effective rate on the overtime portion stays far below the top marginal rate that appears on a pay stub.
Can pre-tax contributions offset the extra withholding?
Yes. Directing overtime income into a traditional 401k or HSA reduces taxable income for that pay period, which lowers both the marginal tax and the withholding calculated on the check, a practical way to keep more of an overtime-heavy paycheck without changing tax brackets at all.
Frequently Asked Questions
Sources & Methodology
Calculations are based on the most current publicly available data from authoritative government and industry sources: