Overtime Tax Calculator
Updated August 2026 · Free · No sign-up
Calculate taxes on your overtime pay and your real take-home OT earnings — and see, with actual numbers, why the eternal claim that "overtime is taxed more" is a withholding illusion, not a tax rule.
Quick answer: Overtime is taxed at exactly the same rates as regular wages — there is no OT tax bracket. A $20/hour worker's 10 OT hours ($300 gross at 1.5x) typically nets $210-230 after ~22-30% combined withholding. Heavier per-check withholding reconciles at filing.
The Myth, Killed With Arithmetic
There is no special overtime tax. OT dollars stack on top of your income and are taxed at your marginal rate — the same rate your next regular dollar would face. The illusion has two sources:
- Withholding tables annualize each paycheck: a big OT week looks, to payroll software, like a raise — so it withholds as if you earn that much every week. The over-withheld slice comes back as a tax refund.
- Marginal ≠ average: OT dollars are your highest-taxed dollars (they sit on top), so their bite feels sharper than your paycheck's blended rate — but they follow the identical brackets everything else does.
Compute the gross side in the overtime pay calculator; this page handles what survives taxes.
Worked Examples
Example 1 — typical week. $20/hour, 10 OT hours → $300 gross OT. In the 12% bracket + 7.65% FICA + 5% state = 24.65% marginal → $226 take-home.
Example 2 — the "bracket jump" fear. A worker near the 12%→22% line earns $2,000 of OT: only the dollars above the threshold pay 22% — perhaps $40 more tax than expected, never a pay cut. Brackets are marginal; extra work always nets more money.
Example 3 — the withholding illusion in numbers. A $58k earner's 20-OT-hour paycheck may see ~30% withheld from OT (annualized tables) though the true marginal rate is ~24.65% — the ~$32 difference on $600 returns at filing.
What Actually Comes Out of OT Pay
| Deduction | Rate on OT dollars |
|---|---|
| Federal income tax | Your marginal bracket (10-37%) |
| Social Security | 6.2% (until the wage base) |
| Medicare | 1.45% (+0.9% above $200k) |
| State income tax | 0-13% by state |
| 401(k) %-based deferral | Your election — OT boosts retirement savings automatically |
Is Overtime Worth It After Taxes? The Honest Framework
Ten OT hours netting $226 is still $22.60/hour of take-home for marginal time — compare it against what else the hours buy you. The real erosion factors are not taxes: benefit phase-outs at specific income lines (EITC, subsidies), childcare costs of extra hours, and burnout. Two genuinely tax-smart OT moves: raise your 401(k) percentage during heavy-OT seasons (defers the marginal-rate dollars — see the match calculator), and if withholding consistently overshoots, adjust your W-4 rather than gifting the IRS an interest-free loan.
"No Tax on Overtime" Proposals — Status Check
Recurring US political proposals to exempt OT from federal income tax generate news cycles and confusion. As of 2026, verify current law before assuming any exemption applies to you: deduction-style provisions, caps, and FICA treatment differ by proposal and year, and paycheck withholding may not reflect year-end rules. When in doubt, this calculator's bracket model reflects the standard treatment — check IRS guidance for the current year's specifics.
OT Tax Around the World (Quick Notes)
- UK: same marginal-rate logic; heavy OT can nudge earners across the £50k child-benefit taper or £100k personal-allowance clawback — the UK's real "OT tax traps".
- India: OT is fully taxable salary; the Factories Act's 2x rate (see the double time calculator) is gross, not net.
- Everywhere: the supplemental-withholding drama that hits bonuses usually does NOT apply to OT — overtime runs through normal payroll tables.
Frequently Asked Questions
Is overtime taxed at a higher rate?
No — OT is ordinary income at your normal marginal bracket. Paycheck withholding may run heavier because tables annualize the big week; the excess returns at filing.
Why was so much tax taken from my overtime check?
Withholding tables treated the OT-inflated paycheck as your new normal salary and withheld accordingly. Your actual tax is set by annual income, reconciled on your return.
Can overtime push me into a higher tax bracket?
Only the dollars above the threshold pay the higher rate — brackets are marginal. Extra work always increases take-home; it can never reduce it via brackets.
How much tax comes out of overtime pay?
Marginal federal bracket + 7.65% FICA + state rate — commonly 22-32% combined. $300 of OT typically nets $205-235.
Is there no tax on overtime now?
Proposals and provisions change — verify current-year IRS rules before assuming an exemption. Standard treatment (this calculator) taxes OT as ordinary wages.
Does 401(k) come out of overtime?
Percentage-based deferrals apply to OT earnings — heavy-OT periods are efficient moments to raise your deferral rate and shelter marginal-rate dollars.
✓ Formula verified • Last updated: August 20, 2026