How overtime is calculated
Under the federal Fair Labor Standards Act, most hourly (non-exempt) employees earn at least 1.5 times their regular rate for hours over 40 in a workweek. Some states, such as California, also require daily overtime and double time.
Weekly pay = rate × regular hours + rate × 1.5 × overtime hours
$22 an hour with 6 overtime hours: 22 × 40 = $880, plus 22 × 1.5 × 6 = $198, total $1,078.
Check your state’s rules and your employer’s policy for the exact thresholds that apply to you.
“No tax on overtime”: the federal deduction (2025–2028)
For tax years 2025 through 2028, you can deduct the premium part of qualified overtime (the extra half in time-and-a-half) on your federal return: up to $12,500 a year, or $25,000 for married couples filing jointly. The deduction shrinks by $100 for every $1,000 of income above $150,000 ($300,000 joint).
Example: 6 overtime hours a week at $22 means a premium of $11 × 6 = $66 a week, about $3,432 a year that could be deducted. It lowers federal income tax only; Social Security, Medicare and most state taxes still apply. Overtime is still withheld from your paycheck normally, so the saving usually shows up in your tax refund.
California example
In California, a 10-hour day counts 2 hours of daily overtime even if the week totals 40 hours. At $25 an hour that’s 8 × $25 + 2 × $37.50 = $275 for the day.
Related calculators
- Hourly to Salary Calculator: Hourly wage to yearly salary.
- Bonus Tax Calculator: Your bonus after taxes, and salary + bonus.
- Take-Home Pay Calculator: Your pay after federal, state and payroll taxes.
Questions people ask
Is overtime tax-free now?
Not fully. From 2025 to 2028 you can deduct the extra “half” of time-and-a-half (up to $12,500, or $25,000 joint) from federal taxable income. The rest of your overtime pay is taxed normally, and Social Security and Medicare still apply.
Do salaried employees get overtime?
Some do. Exempt status depends on salary level and job duties, not just being paid a salary. Check the US Department of Labor guidance or your HR team.
Formula checked October 2026 · How we calculate