How overtime pay works
Under the federal Fair Labor Standards Act (FLSA), non-exempt employees must be paid at least one and a half times their regular rate for every hour worked over 40 in a workweek. A workweek is a fixed 7-day period; hours cannot be averaged over two weeks. Some states go further: California, for example, also requires overtime after 8 hours in a day and double time after 12.
Weekly pay = regular rate × regular hours + regular rate × 1.5 × overtime hours + regular rate × 2 × double-time hours
Worked example
You earn $22 an hour and work 48 hours this week:
- Regular pay: 40 × $22 = $880
- Overtime rate: $22 × 1.5 = $33; overtime pay: 8 × $33 = $264
- Total for the week: $1,144, an average of $23.83 an hour across all 48 hours
The regular rate includes more than your base wage
The FLSA "regular rate" includes most non-discretionary pay for the week, such as shift differentials and production or attendance bonuses. If you earn those, your overtime rate is 1.5 times the higher blended rate, not just your base wage. Discretionary bonuses, gifts and expense reimbursements are left out.
The 2026 overtime deduction
For 2025 through 2028, workers can deduct qualified overtime compensation on their federal income tax return: up to $12,500 a year, or $25,000 for married couples filing jointly. Only the premium part counts, the extra "half" in time and a half, and only for overtime the FLSA requires. In the example above that is 8 × $11 = $88 for the week. The deduction shrinks for modified adjusted gross income above $150,000 ($300,000 joint), and it does not reduce Social Security or Medicare tax. To get it in your paychecks rather than at tax time, include it in Step 4(b) of a new Form W-4.
Who is entitled to overtime?
Most hourly workers are non-exempt and must get overtime. Employees are exempt only if they are paid a salary of at least the minimum set by the Department of Labor and their main duties are executive, administrative or professional, such as managing a team or work requiring advanced knowledge. Some jobs have their own rules, including certain computer professionals, outside sales staff, truck drivers and farm workers. Job titles do not decide it: an "assistant manager" who mostly runs a register is usually non-exempt.
Overtime and your paycheck
Overtime is wages, so Social Security, Medicare and income tax are withheld from it like the rest of your pay. A week with a lot of overtime often shows a higher percentage withheld, because payroll treats that big paycheck as if you earned the same amount every pay period. The difference is settled on your tax return. Run the week's gross pay through the paycheck calculator to see your take-home pay.
Common mistakes
- Counting overtime by the day. Federal law counts hours over 40 in the week; daily overtime applies only where state law requires it.
- Assuming salaried workers never get overtime. Salaried employees can be non-exempt; exemption depends on salary level and job duties, not on being paid a salary.
- Using the whole overtime wage for the deduction. Only the premium above the regular rate is qualified overtime.
This calculator shows pay before tax and assumes all overtime and double-time hours are over 40 in the workweek. Your employer's policy, a union contract or state law can give you more.
Frequently asked questions
How do I calculate time and a half?
Multiply your hourly rate by 1.5 to get the overtime rate, then multiply by your overtime hours. At $22 an hour, time and a half is $33, and 8 overtime hours pay $264.
When does overtime start?
Under federal law, after 40 hours worked in a workweek. A few states, such as California, also require overtime after 8 hours in one day.
How much overtime can I deduct in 2026?
Up to $12,500 of qualified overtime premium ($25,000 married filing jointly), reduced at higher incomes. Only the extra half-time portion required by the FLSA counts, not the whole overtime wage.
Is overtime taxed more than regular pay?
No. Overtime is taxed at the same rates as other wages. A big overtime paycheck can have more withheld because payroll treats it as if you earned that much every period, but the final tax is settled on your return.
How is double time calculated?
Multiply your regular rate by 2. At $22 an hour, double time is $44 an hour. Federal law does not require double time; it comes from state law, such as California's rule for hours over 12 in a day, or from a union or company policy.
Do salaried employees get overtime?
Only if they are non-exempt. A salaried employee whose pay is below the federal minimum salary level, or whose duties do not meet an exemption test, must still be paid 1.5 times their regular rate for hours over 40.
Sources
- U.S. Department of Labor, Wage and Hour Division. Overtime Pay; Fact Sheet #23: Overtime Pay Requirements of the FLSA.
- Fair Labor Standards Act of 1938, section 7 (29 U.S.C. 207).
- Internal Revenue Service. Publication 15-T (2026): withholding on qualified overtime compensation (P.L. 119-21).
Last reviewed 21 October 2026. Results are estimates; see our disclaimer.