⏱️ Official 2026 Overtime PortalOvertime Paycheck Calculator
Calculate your exact net take-home pay on time-and-a-half (1.5×) and double-time (2.0×) overtime hours — including federal income tax withholding, FICA, and the 2026 federal overtime premium deduction.
How Overtime Pay and Taxes Work
Under the Fair Labor Standards Act (FLSA), non-exempt employees must receive overtime pay at 1.5 times their regular rate for all hours worked beyond 40 in a single workweek. This is commonly called "time and a half." Some employers and union contracts offer double-time (2.0×) for holidays or extended shifts, though federal law only mandates 1.5×.
The most common misconception about overtime is that it's "taxed more." It's not. Overtime wages are subject to the exact same federal income tax brackets and FICA rates as regular wages. The confusion arises from how payroll software calculates withholding — and understanding this process is key to reading your overtime paycheck correctly.
Why Overtime Paychecks Look Heavily Taxed
Here's what actually happens when you work overtime:
1
Gross Pay Spikes
Your regular 40 hours + overtime hours at 1.5× create a much larger gross paycheck than your typical week. Example: $30/hr × 40 hrs = $1,200 regular + 10 OT hrs × $45 = $450 → $1,650 total.
2
Payroll Annualizes
Your employer's payroll system takes that $1,650 weekly check and projects it across the full year: $1,650 × 52 = $85,800 projected salary. Your normal week ($1,200 × 52) projects to $62,400.
3
Higher Bracket Withholding
The projected $85,800 pushes more income into the 22% federal bracket (vs. 12% for some of the $62,400 projection). So the payroll system withholds more from this single paycheck.
4
Refund at Tax Time
If you don't work overtime every week, your actual annual income is lower than the annualized projection. The over-withholding is refunded when you file your 1040.
What Gets Deducted From an Overtime Paycheck
Every dollar of overtime pay — both the base rate and the premium — passes through the same mandatory deduction layers as regular pay:
- Federal income tax — withheld at a rate determined by annualizing your gross paycheck using the IRS Publication 15-T percentage method and 2026 progressive brackets (10%–37%).
- Social Security (OASDI) — 6.2% on all wages up to the 2026 cap of $176,100. Overtime hours can push you toward this cap faster. See the SSA wage base limit.
- Medicare — 1.45% on all wages with no cap, plus 0.9% Additional Medicare Tax on cumulative wages exceeding $200,000 (single). See IRS Topic No. 751.
- State income tax — varies by state (0% in TX, FL, NV, etc. up to 13.3% in CA). Use our 50-State Calculator for your state.
- Pre-tax deductions — 401(k), health insurance, HSA/FSA still apply to the full paycheck, reducing your taxable base before withholding is computed.
For a complete list of every deduction on a paycheck, see our guide: what actually gets taken out of your paycheck.
The 2026 Federal Overtime Tax Deduction
Starting in 2026, the One Big Beautiful Bill Act introduced a new federal income tax deduction on the premium portion of overtime pay. This is a major development for overtime workers — for the first time, part of your overtime earnings can be sheltered from federal income tax.
How the Overtime Deduction Works
- What qualifies: Only the overtime premium — the extra 0.5× above your base hourly rate — is deductible. If your base rate is $30/hr and your OT rate is $45/hr, only the $15/hr premium qualifies.
- Deduction cap: $12,500 per year (single/HOH) or $25,000 (married filing jointly).
- Income phaseout: The deduction phases out between $150,000–$162,500 AGI (single) or $300,000–$325,000 (joint).
- Eligible years: Tax years 2025 through 2028.
- Who qualifies: Non-exempt employees who receive FLSA-qualified overtime compensation. Salaried exempt workers, self-employed individuals, and business owners do not qualify.
Overtime Deduction Example
A worker earning $25/hr who works 10 overtime hours per week for 50 weeks:
| Item | Calculation | Amount |
|---|
| Regular pay (40 hrs/wk × 50 wks) | 2,000 hrs × $25 | $50,000 |
| OT pay (10 hrs/wk × 50 wks at 1.5×) | 500 hrs × $37.50 | $18,750 |
| Total gross wages | — | $68,750 |
| OT premium (0.5× portion only) | 500 hrs × $12.50 | $6,250 |
| Federal tax deduction claimed | Lesser of premium or $12,500 cap | $6,250 |
| Estimated tax savings (22% bracket) | $6,250 × 22% | $1,375 |
This worker saves $1,375 in federal income tax thanks to the overtime deduction. Note: FICA taxes (7.65%) still apply to all overtime pay — the deduction only reduces federal income tax. For a full analysis, see our no-tax-on-overtime guide or calculate your exact savings with our No Tax on Overtime Calculator.
| Schedule | Regular (40 hrs) | OT Hours (1.5×) | Weekly Gross | Est. Fed Tax | FICA (7.65%) | Net Take-Home |
|---|
| No Overtime | $1,200 | 0 hrs ($0) | $1,200.00 | -$140.58 | -$91.80 | $967.62 |
| 5 hrs OT | $1,200 | 5 hrs ($225) | $1,425.00 | -$179.58 | -$109.01 | $1,136.41 |
| 10 hrs OT | $1,200 | 10 hrs ($450) | $1,650.00 | -$225.08 | -$126.23 | $1,298.69 |
| 15 hrs OT | $1,200 | 15 hrs ($675) | $1,875.00 | -$274.58 | -$143.44 | $1,456.98 |
| 20 hrs OT | $1,200 | 20 hrs ($900) | $2,100.00 | -$324.08 | -$160.65 | $1,615.27 |
*Estimates assume 2026 single filer, standard deduction ($16,100), weekly pay frequency, no state income tax, no pre-tax deductions. Federal tax is calculated using the IRS percentage method (annualized projection). FICA is a flat 7.65%. Actual withholding depends on your W-4, pay frequency, and YTD earnings.
How to Maximize Your Overtime Take-Home Pay
Overtime is always financially worth it — you never lose money by working extra hours in a marginal tax system. But the gap between your overtime gross and net can feel frustrating. Here are proven strategies to keep more of every overtime dollar:
- Claim the 2026 overtime premium deduction. If you're an FLSA non-exempt worker, you can deduct up to $12,500 (single) or $25,000 (joint) of overtime premium pay from your federal taxable income. This can save $1,375–$6,000+ depending on your bracket. See our No Tax on Overtime Calculator for your exact savings.
- Increase pre-tax 401(k) contributions. Boosting your 401(k) contribution during high-overtime periods reduces the taxable base on those larger paychecks. At $24,500 max in 2026 ($32,500 if 50+), every pre-tax dollar shelters your overtime earnings from federal income tax. See IRS 2026 limits.
- Fund your HSA. Health Savings Account contributions ($4,400 self / $8,750 family in 2026) bypass both federal income tax and FICA — making them even more tax-efficient than 401(k) contributions for reducing overtime withholding.
- Right-size your W-4 withholding. If you work overtime regularly, your payroll system may overwithhold because it annualizes each check independently. Use the IRS Withholding Estimator mid-year to adjust your W-4 and get more in each paycheck instead of a large refund.
- Understand your net OT hourly rate. At $30/hr base (1.5× = $45/hr OT), after ~25% combined tax withholding, your net OT rate is roughly $33.75/hr. That's still 2.5× higher than doing nothing — and any over-withholding comes back as a refund. Use the calculator above to see your exact net rate.
For more overtime tools, see our Time & Half Calculator (quick rate math), No Tax on Overtime Calculator (deduction math), and our detailed explainer: how the overtime deduction works. Planning a raise alongside overtime? Our Raise Calculator shows how much of a raise you keep after marginal taxes.
