# Overtime Calculator 2026: Federal and California Rules, Plus the No-Tax-on-Overtime Deduction

Canonical: https://takehomepaytools.com/overtime-calculator/
Last updated: 2026-10-31

Federal law requires 1.5× your regular pay rate for hours over 40 in a workweek. Working 46 hours at $22.00 an hour comes to $1,078.00 gross pay for the week, of which $66.00 is the overtime premium that can count toward the federal "no tax on overtime" deduction when you file.

Interactive calculator: https://takehomepaytools.com/overtime-calculator/ (runs in the browser).

## How federal overtime pay works

The Fair Labor Standards Act requires 1.5x your regular rate of pay for every hour over 40 in a workweek, a fixed, recurring 168-hour period.

## How California overtime pay works

California requires 1.5x pay for hours over 8 in a single workday, 2x for hours over 12 in a day, and special rates for the seventh consecutive day worked in a workweek.

## The "no tax on overtime" federal deduction

This deduction (up to $12,500, or $25,000 filing jointly, for 2025-2028) is claimed on Schedule 1-A (Form 1040) when you file. It does not reduce what your employer withholds from your paycheck unless you submit a new Form W-4 asking for that.

Only the overtime premium required by the FLSA counts toward the deduction (up to $12,500, or $25,000 filing jointly, for tax years 2025-2028).

### Worked example

An hourly employee earning $22.00 an hour works 46 hours in one workweek under the federal rule.

| Step | Calculation | Amount |
| --- | --- | --- |
| Regular hours | 40 hr × $22.00 | $880.00 |
| Overtime hours (time and a half) | 6 hr × $22.00 × 1.5 | $198.00 |
| Gross pay for the week | 46 hr worked | $1,078.00 |
| Federally required share of the overtime premium | 0.5 × $22.00 × 6 hr over the 40-hour FLSA threshold | $66.00 |

## Frequently asked questions

### Is overtime pay taxed at a higher rate?

No. Overtime pay is regular wages for tax purposes, not a separate category like a bonus. It is combined with your other wages for the pay period and withheld using the normal W-4 percentage method, plus Social Security and Medicare. A bigger paycheck can land in a higher withholding bracket for that check, which is why it can look more heavily taxed, but it is settled at your normal rate when you file.

### What is the "no tax on overtime" deduction?

It is a federal income tax deduction for tax years 2025 through 2028, up to $12,500 ($25,000 if you file jointly) of the portion of your overtime pay required by the Fair Labor Standards Act. It is claimed on Schedule 1-A (Form 1040) when you file your return. It is not an exemption from withholding: your employer still withholds federal income tax, Social Security and Medicare from overtime pay the same as any other wages.

### Does the deduction reduce what my employer withholds from my paycheck?

Only if you ask it to. By default, no: overtime pay is withheld normally. You can submit a new Form W-4 with your expected deduction entered in Step 4(b) to reduce withholding during the year, or use the IRS Tax Withholding Estimator, but most people simply claim the deduction when they file.

### How much of my overtime pay actually qualifies for the deduction?

Only the premium required by federal law: half your regular rate, for hours over 40 in a workweek. If your employer or state law pays more than that (for example, California daily overtime or double time), the extra above the federal 40-hour requirement is still taxable pay, it just is not part of the deduction.

### Does California overtime work differently from federal overtime?

Yes. Federal law only requires overtime for hours over 40 in a workweek. California also requires 1.5× pay for any hours over 8 in a single workday, and 2× pay for hours over 12 in a day or on the first 8 hours of a seventh consecutive day worked, even if the week totals 40 hours or less.

### Worked example: 10, 10, 8, 8, 8 hours over five days in California

At $22.00 per hour, two 10-hour days each add 2 hours of daily overtime, for 4 overtime hours total alongside 40 regular hours: $1,012.00 gross pay for the week. The week itself totals only 44 hours, under the federal 40-hour threshold, so none of this overtime premium is required by the FLSA and none of it is eligible for the federal overtime deduction.

### Will my W-2 show the deduction?

Starting with tax year 2026, employers must separately report your qualified overtime compensation on Form W-2, box 12, using code TT. You can only deduct what is reported there; if it looks wrong, ask your employer for a corrected Form W-2c.

### Does the deduction phase out at higher incomes?

Yes. It is reduced by $100 for every $1,000 that your modified adjusted gross income is above $150,000 ($300,000 filing jointly), reaching zero well before the top of that range. If you are married, you must file a joint return to claim the deduction at all.

## Sources

- [Fair Labor Standards Act (29 U.S.C. § 207(a)(1)); U.S. Department of Labor, Wage and Hour Division, "Overtime Pay"](https://www.dol.gov/agencies/whd/overtime), verified 2026-10-31
- [California Labor Code § 510(a)](https://california.public.law/codes/ca_lab_code_section_510), verified 2026-10-31
- [26 U.S.C. § 225, Qualified overtime compensation (added by the One, Big, Beautiful Bill Act, Pub. L. 119-21, sec. 70202); IRS Fact Sheet FS-2026-13, "Updates to questions and answers about the new deduction for qualified overtime compensation" (August 2026)](https://www.law.cornell.edu/uscode/text/26/225), verified 2026-10-31