Overtime After Tax: What You Actually Keep Per Extra Hour (2026)

The Gap Between the Promise and the Deposit

Time and a half sounds like a clean deal. At a $24 base rate, every hour past forty is worth $36. Then payday arrives, the check is bigger but not that much bigger, and the natural conclusion is that overtime is "taxed extra."

It is not. There is no overtime tax rate anywhere in the tax code. Overtime is ordinary wages, taxed exactly like the first forty hours. What changes is *how much is withheld from that particular check*, and that difference is worth understanding before you decide whether the shift is worth it.

What Comes Out of an Overtime Hour

Four deductions stand between your overtime rate and your bank account.

Social Security takes 6.2 percent of every dollar until your annual wages pass the wage base. Medicare takes 1.45 percent with no ceiling at all. Neither cares about allowances, dependants or deductions — they are flat, and they hit overtime the same way they hit base pay.

Federal income tax is where the confusion lives. Withholding is a projection, not a bill. State income tax then follows your state's own rules, from nothing at all in nine states to double digits in a few.

| Base rate | Overtime rate | Typical take-home per OT hour |

| --- | --- | --- |

| $18.00 | $27.00 | $20.50 – $22.00 |

| $24.00 | $36.00 | $26.50 – $28.50 |

| $32.00 | $48.00 | $34.50 – $37.50 |

| $45.00 | $67.50 | $47.00 – $52.00 |

The range reflects state tax and your W-4 — run your own figure in the overtime tax calculator.

Why a Heavy Overtime Check Is Withheld Harder

Most payroll systems use the percentage method: they take the size of this check, imagine every check this year looks like it, and withhold as if that were your annual income. A week with fourteen overtime hours looks, to that formula, like a much higher-paid year than you are actually having.

So the withholding rate on that check is higher than your real annual rate. Nothing is lost. The excess comes back as a refund, or offsets what you owe, when you file. It just means the check feels smaller than the arithmetic promised.

The Number That Should Drive Your Decision

Before agreeing to overtime, work out one figure: after-tax dollars per extra hour. Take 1.5 times your regular rate, subtract 7.65 percent for FICA, then subtract your marginal federal rate and state rate.

At $24 an hour: $36 gross, minus $2.75 FICA, minus roughly $4.30 federal at 12 percent and $1.30 state at 4 percent, leaves about $27.65 in hand.

Now weigh that against what the hour costs you — childcare, a longer commute, a lost evening. That comparison, not the gross rate, is the honest one. The overtime paycheck calculator does the same math across a full pay period.

Three Legitimate Ways to Keep More of It

Fix your W-4 if it is wrong. Over-withholding all year to receive a large refund is an interest-free loan to the government. A current W-4 spreads the money across the year instead.

Route overtime into pre-tax accounts. A 401(k) or HSA contribution reduces federal taxable wages, so an overtime-heavy month is a good month to raise the contribution rate temporarily.

Check the regular rate is right. If you get a shift differential or a promised bonus, your overtime should be computed on a regular rate that includes them. Understated regular rate means understated overtime — see the overtime wage estimator to test your own figures.

What About "No Tax on Overtime"?

Proposals to exempt overtime from federal income tax get plenty of attention, and the details matter enormously: whether FICA is included, whether there is a cap, and which years apply. We track the current position separately on the no tax on overtime calculator rather than guessing here.

The Short Version

Overtime is not taxed at a special rate; it is withheld at a rate that assumes every check looks like your biggest one. Expect to keep roughly 72 to 78 cents on the overtime dollar, decide using that number, and check your stub itemises the premium separately. Then run your own case in the overtime tax calculator.