Overtime Calculator 2026
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.
Federal rule verified . California daily-overtime rule included; other state overtime rules are not yet covered.
Gross pay this week $1,078.00
| Regular pay | $880.00 |
|---|---|
| Overtime pay (1.5×) | $198.00 |
46 hours worked, 6 of them overtime
Show the math
| 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 |
Estimated deduction this year $2,066.00
Claimed on Schedule 1-A (Form 1040) when you file. It does not change what your employer withholds from your paycheck.
Show the math
| Qualified overtime compensation this year $2,000.00 earlier + $66.00 this period | $2,066.00 |
| Capped at the annual limit $12,500 per return | $2,066.00 |
| Estimated deductible amount Claimed on Schedule 1-A (Form 1040) when you file, not withheld from pay | $2,066.00 |
Overtime pay is withheld like any other wages; it is not a flat-rate supplemental payment. The deduction estimate is for your tax return, not your paycheck.
How federal overtime pay works
The Fair Labor Standards Act requires 1.5× your regular rate of pay for every hour over 40 in a workweek — a fixed, recurring 168-hour period your employer sets. There is no daily limit under federal law and no requirement to average hours across two or more weeks.
How California overtime pay works
California requires 1.5× pay for hours over 8 in a single workday, in addition to the 40-hour weekly rule. Hours over 12 in a day are paid at 2×. Work on the seventh consecutive day of a workweek is paid at 1.5× for the first 8 hours and 2× after that.
Worked example: 10, 10, 8, 8, 8, 0, 0 hours over the week at $22.00 an hour comes to $1,012.00 gross pay — 40 regular hours and 4 overtime hours — even though the week totals only 44 hours, under the federal 40-hour mark.
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 portion of your overtime pay required by the FLSA counts: half your regular rate, for hours over 40 in the workweek. If a state law or your employer pays more than that — California's daily or double-time rules, for example — the extra is still taxable pay; it just is not part of this deduction.
Worked example
An hourly employee earning $22.00 an hour works 46 hours in one workweek under the federal rule. That comes to $1,078.00 gross pay, of which $66.00 is federally required overtime premium. Added to $2,000.00 of qualified overtime already earned earlier this year, the running total is $2,066.00 and the estimated deduction is $2,066.00 (a $12,500 annual cap applies per return, $25,000 filing jointly).
| 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", verified
- California Labor Code § 510(a), verified
- 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), verified
See the methodology for how each figure is calculated and checked.