How do I calculate overtime pay?

Multiply your regular hourly rate by 1.5 to get your overtime rate, then multiply that by the number of overtime hours. For example, at $20/hour your overtime rate is $30/hour; 8 overtime hours pays 8 × $30 = $240. Add that to your regular pay (regular hours × base rate) for total gross. Under the federal FLSA, overtime applies to hours worked beyond 40 in a single workweek.

What is time and a half?

Time and a half means 1.5 times your regular rate of pay. It is the minimum overtime premium required by the federal Fair Labor Standards Act for non-exempt employees who work more than 40 hours in a workweek. If you earn $18/hour, time and a half is $27/hour. The extra 0.5× above your regular rate is the 'premium' portion that qualifies for the 2026 No Tax on Overtime deduction.

What is the 2026 No Tax on Overtime deduction?

The One Big Beautiful Bill Act created a temporary federal income tax deduction for qualified overtime compensation for tax years 2025 through 2028. It is an above-the-line deduction (you can claim it even without itemizing) for the FLSA 'half' premium — the amount of overtime pay that exceeds your regular rate. The deduction is capped at $12,500 for single filers and $25,000 for married filing jointly, and phases out above $150,000 / $300,000 of modified adjusted gross income. It reduces federal income tax only, not Social Security or Medicare.

Does No Tax on Overtime mean my overtime is completely tax-free?

No. The deduction only removes federal income tax on the FLSA premium 'half' portion of your overtime, up to the cap. Your overtime is still subject to Social Security tax (6.2%), Medicare tax (1.45%), and any state or local income taxes. It also only covers the 0.5× premium above your regular rate, not the full time-and-a-half amount. So a worker paid $30/hour overtime (from a $20 base) gets a deduction on the $10 premium per hour, not the full $30.

Who qualifies for the overtime tax deduction?

You must receive overtime required under FLSA Section 7 (the 1.5× rule for hours over 40 per week), have a valid Social Security number, and — if married — file jointly to claim it. The deduction phases out once modified AGI exceeds $150,000 (single) or $300,000 (joint), reduced by $100 for every $1,000 over the threshold. Highly compensated, exempt employees who do not receive FLSA-required overtime generally do not qualify. Your employer reports qualified overtime separately so you can claim it on your return.

How is double-time pay calculated?

Double-time is 2 times your regular rate. At $22/hour, double-time is $44/hour; 4 double-time hours pay $176. Federal law never requires double-time — it comes from state law or union contracts. California, for example, requires double-time for hours beyond 12 in a workday and beyond 8 on the seventh consecutive workday. Only the FLSA-required portion of any overtime qualifies for the 2026 deduction, so the extra dollar in double-time beyond the 1.5× FLSA minimum is not deductible.

When does overtime start — after 40 hours or 8 hours a day?

Under federal FLSA rules, overtime starts only after 40 hours in a workweek; there is no federal daily overtime. However, some states add daily overtime. California requires 1.5× after 8 hours in a day and 2× after 12 hours. Alaska and Nevada (for employees under a certain wage) also have daily overtime. Colorado uses a 12-hour daily trigger. Always apply whichever rule — federal weekly or state daily — gives the employee the greater pay.

Are salaried employees entitled to overtime?

Often, yes. Being paid a salary does not automatically make you exempt from overtime. To be exempt you must be paid at least $684 per week ($35,568 per year) on a salary basis AND perform exempt executive, administrative, or professional duties. If you earn below that salary threshold, or your duties do not meet the test, you are non-exempt and owed overtime for hours over 40. Job titles alone never determine exemption — the salary and duties tests do.

What is the 'regular rate of pay' for overtime?

The regular rate is your total straight-time earnings for the week divided by total hours worked — and it must include nondiscretionary bonuses, commissions, and shift differentials, not just your base hourly wage. For example, a $20/hour worker who also earns a $100 production bonus over 50 hours has a regular rate of ($20×50 + $100) ÷ 50 = $22/hour, making the overtime rate $33 rather than $30. Discretionary bonuses, gifts, and paid leave are excluded from the regular rate.

How do I calculate overtime on a biweekly paycheck?

Overtime is always measured per workweek, never per pay period — even if you are paid biweekly. Split a biweekly period into its two separate workweeks, test each week against the 40-hour threshold individually, then add the results. A worker with 45 hours one week and 35 the next is owed 5 hours of overtime, not zero — you cannot average the 80 hours across two weeks to avoid overtime. This per-week rule is one of the most commonly violated FLSA provisions.

Is overtime taxed at a higher rate?

Overtime is not taxed at a special higher rate, but it can push a paycheck into a higher withholding tier temporarily because payroll systems annualize each check. Your true federal income tax depends on total annual income and brackets, not on whether income came from overtime. With the 2026 No Tax on Overtime deduction, the FLSA premium portion can actually be taxed less than regular wages at the federal income-tax level. FICA (Social Security and Medicare) still applies to every overtime dollar.

Does paid time off count toward overtime hours?

No. Under federal FLSA rules, only hours actually worked count toward the 40-hour overtime threshold. Vacation, holidays, sick leave, and other paid time off are not 'hours worked,' so a week with 32 worked hours plus 8 holiday hours does not generate overtime even though the paycheck shows 40 paid hours. Some union contracts or state rules are more generous and do count certain paid leave — check your specific agreement.

How much overtime can I deduct in 2026?

You can deduct up to $12,500 of qualified overtime premium if you are single, or $25,000 if married filing jointly, for tax year 2026. 'Qualified overtime' is the FLSA half-premium — the portion of overtime pay above your regular rate. If your annual overtime premium exceeds the cap, only the cap amount is deductible. The benefit shrinks once modified AGI passes $150,000 (single) or $300,000 (joint), losing $100 of deduction for each $1,000 of income above the threshold.

How is overtime pay handled in the UK?

The UK has no statutory overtime rate. There is no legal requirement to pay extra for overtime — pay is set by your employment contract, which may specify time and a half, double time, or plain time. The only legal floor is that your average pay across all hours must not fall below the National Minimum/Living Wage, and the Working Time Regulations cap the average working week at 48 hours unless you opt out. Switch this calculator to UK mode to model your contractual overtime rate without the US tax layer.

How is overtime pay handled in Canada?

In Canada overtime is set by each province plus the federal Canada Labour Code for federally regulated workers. The most common rule is 1.5× after 44 hours per week (federal and several provinces), but thresholds vary: Ontario 44 hours, British Columbia 8 hours/day and 40/week, Alberta 8/day or 44/week. The rate is almost always time and a half. Use the Canada mode to compute time-and-a-half pay; the US-only 2026 deduction does not apply.

How is overtime pay handled in Australia?

Australian overtime is governed by modern awards and enterprise agreements registered with the Fair Work Commission. A common pattern is 1.5× for the first 2-3 overtime hours and 2× thereafter, with double-time on Sundays and public holidays in many awards. Casual employees may receive overtime on top of casual loading. Because rates are award-specific, switch to Australia mode and enter the multiplier from your award to estimate gross overtime pay.

Can my employer give comp time instead of overtime pay?

In the US private sector, no — non-exempt employees must be paid cash overtime; 'comp time' (paid time off in lieu) is illegal for private employers under the FLSA. Only public-sector (government) employers may offer comp time at 1.5 hours off per overtime hour, and only by agreement. If a private employer offers you time off instead of overtime pay, that generally violates federal law and you may be owed back wages. Document your hours and consult the Department of Labor.

How accurate is the 2026 tax estimate in this calculator?

The calculator applies the published 2026 No Tax on Overtime rules: the FLSA half-premium definition, the $12,500 / $25,000 caps, and the $150,000 / $300,000 phase-out thresholds. Your tax saving is estimated as the deductible amount multiplied by the marginal federal bracket you select, which is how an above-the-line deduction works. It does not model state income tax, the exact phase-out reduction, or interactions with other deductions. For filing, rely on your W-2 reporting of qualified overtime and IRS instructions, and consult a tax professional for edge cases.

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Overtime Pay Calculator

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Country

Hourly Rate ($)

Regular Hours / Week

Overtime Hours / Week

OT Multiplier

Double-Time Hours / Week (optional, 2×)

2026 No Tax on Overtime

Weeks of OT / Year

Filing Status

Marginal Federal Bracket

Total Weekly Gross Pay

$ 1,375

OT rate $37.50/hr · Annual $68,750

Weekly Pay Breakdown

Regular pay

$1,000

Overtime pay (1.5×)

$375

Double-time pay (2×)

💰 2026 No Tax on Overtime Deduction

Deductible OT premium (FLSA "half") $6,250

Est. federal tax saved $750

Deduction capped at $12,500 (single). FICA still applies to overtime; this saves federal income tax only.

lightbulb Tips

•FLSA overtime = 1.5× regular rate after 40 hrs/week
•2026 deduction covers only the 0.5× "half" premium, not full OT
•Deduction cap: $12,500 single / $25,000 joint; phases out at $150k/$300k
•FICA still hits every OT dollar — deduction is income-tax only
•Regular rate must include nondiscretionary bonuses & shift pay

Overtime Pay Calculator

Overtime Pay calculator

Weekly Pay Breakdown

lightbulb Tips