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Overtime tax · 2026

Overtime Tax Calculator

Understand how overtime is actually taxed, why your check looks smaller than expected, and estimate your No Tax on Overtime deduction.

Calculation breakdown

The overtime tax myth vs. the math

BeliefReality
"Overtime is taxed at a higher rate."It's ordinary income at your normal marginal rate.
"They took half my overtime check."Withholding over-estimates on big checks; you reconcile it at tax time.
"No Tax on Overtime = tax-free."Only the premium half is deductible, capped, and only for federal income tax.
"It's deducted automatically."It applies when you file; withholding may not change during the year.

How to use this calculator

  1. 1

    Enter your overtime

    Your hourly rate plus regular and overtime hours. The tool finds your overtime pay and its deductible premium portion.

  2. 2

    Estimate the No-Tax deduction

    Add your filing status, income (MAGI) and marginal bracket to see the No Tax on Overtime deduction and the federal income tax it saves.

  3. 3

    Remember payroll tax still applies

    Social Security and Medicare (7.65%) come out of overtime regardless, and state income tax may too. The deduction is for federal income tax only.

Bottom line: work the overtime — it's still more money. The "taxed more" feeling is a withholding artifact, not a higher rate. And with the 2025–2028 deduction, part of your overtime can genuinely lower your federal tax. For the precise deduction with income phaseout, use the No Tax on Overtime calculator.

Frequently asked questions

Is overtime taxed more than regular pay?
No. Overtime is taxed as ordinary income at the same rates as your regular wages. It can look higher because a larger one-time paycheck may have more tax withheld up front, but it evens out when you file. Your marginal tax rate does not change just because pay is overtime.
Why does my overtime check seem taxed so heavily?
Withholding tables treat each paycheck as if you earned that amount all year, so a big overtime week can over-withhold. You get the excess back as a refund (or it reduces what you owe). The actual tax rate on overtime equals your normal marginal rate.
How does the No Tax on Overtime deduction lower my tax?
It lets you deduct the premium "half" of FLSA time-and-a-half (up to $12,500 single / $25,000 joint) from taxable income for 2025–2028. At a 22% bracket, a $10,000 deduction saves about $2,200 in federal income tax. Use the No Tax on Overtime calculator for the full caps and phaseout.
Is overtime subject to Social Security and Medicare tax?
Yes. Even with the No Tax on Overtime deduction, overtime remains subject to the 7.65% FICA payroll tax (Social Security + Medicare). The deduction only affects federal income tax.
Do I owe state tax on overtime?
Usually yes, unless your state has no income tax. The federal No Tax on Overtime deduction does not automatically apply to state taxes — check your state’s rules.

Sources & further reading

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