Enter your hourly rate and hours to see your overtime rate, overtime pay and weekly total – plus how much of it you can deduct under the new "no tax on overtime" rule.
Under the Fair Labor Standards Act, non-exempt employees earn at least 1.5 times their regular rate for hours over 40 in a workweek. Some states (e.g. California) also require daily overtime and double time.
For 2025–2028 you can deduct the overtime premium — the extra half, not the whole overtime pay — up to $12,500 a year when you file; the deduction phases out above $150,000 of income ($300,000 joint). Overtime is still withheld and subject to Social Security and Medicare.
Double time is not required by federal law, so only the FLSA half-time premium counts for the deduction.
This is an estimate based on published rates, not tax or financial advice. Your payslip or assessment may differ. We are an independent site, not affiliated with any government agency.
Overtime rules in brief
Federal rule (FLSA): at least 1.5 × your regular rate for hours worked over 40 in a workweek.
Regular rate includes most bonuses and shift differentials, so overtime on a nondiscretionary bonus is owed too.
Double time is not required federally; some employers and states pay it for holidays, a seventh consecutive day or very long days.
Worked example: 48-hour week at $25
$25 an hour, 40 regular + 8 overtime hours
Pay this week$1,300.00
Overtime pay
$300.008 h × $37.50
Overtime rate
$37.50
Deductible overtime premium (year)
$2,000no tax on overtime, 2025–2028
Regular pay (40 h × $25.00)
$1,000.00
Overtime pay (8 h × $37.50)
$300.00
Gross pay for the week
$1,300.00
Overtime premium this week (8 h × half rate)
$100.00
Premium over 20 weeks
$2,000.00
The overtime deduction (2025–2028)
The deduction covers only qualified overtime compensation – the amount above your regular rate that the FLSA requires, i.e. the “half” in time-and-a-half. Your employer reports it on your W-2. In the example above, 8 hours × $12.50 = $100 a week qualifies; over 20 such weeks, $2,000 comes off your taxable income when you file. Use the income tax calculator to see the effect on your refund.
Questions people ask
How is time and a half calculated?
Multiply your regular hourly rate by 1.5 for every hour over 40 in the workweek. At $25 an hour, overtime is $37.50 an hour, so 8 overtime hours add $300 to a $1,000 week.
Is overtime tax-free in 2026?
Only the premium part can be deducted on your return – the extra half of time-and-a-half – up to $12,500 a year ($25,000 joint), phasing out above $150,000 of income ($300,000 joint). Overtime is still withheld and pays Social Security and Medicare.
Who is entitled to overtime?
Non-exempt employees under the Fair Labor Standards Act. Salaried workers earning less than the federal salary threshold and most hourly workers qualify; executive, administrative and professional employees above the threshold are usually exempt.
Do I get overtime for working more than 8 hours in a day?
Not under federal law, which counts only hours over 40 in a week. California, Alaska, Nevada and Colorado have daily overtime rules.
This is an estimate based on published rates, not tax or financial advice. Your payslip or assessment may differ. We are an independent site, not affiliated with any government agency. Read the full disclaimer.
