Last updated: March 22, 2026
Overtime Tax Calculator
Overtime is not taxed at a higher rate than regular pay — but it can push your total income into a higher marginal tax bracket, increasing the rate applied to those additional dollars. Use the overtime pay calculator alongside this guide to see exactly how overtime affects your federal, FICA, and state tax obligations for 2025 and 2026.
Is Overtime Taxed at a Higher Rate?
| No. Overtime pay is not taxed at a special higher rate. The IRS taxes overtime wages the same way it taxes regular wages — as ordinary income subject to your marginal federal income tax bracket. However, because overtime increases your total annual income, it can push some of your earnings into a higher bracket, which means those additional dollars are taxed at a higher rate. FICA taxes (Social Security 6.2% and Medicare 1.45%) also apply to all overtime earnings. |
How Overtime Affects Your Federal Tax Bracket
The U.S. federal income tax system is progressive and marginal. You do not pay a single flat rate on all income. Instead, each portion of your income is taxed at the rate for that bracket. Overtime earnings are simply additional ordinary income stacked on top of your regular wages.
2025–2026 federal income tax brackets (single & MFJ)
The tables below reflect IRS Rev. Proc. 2024-61, which governs 2025 tax year rates. These same rates apply for the 2026 tax year filing (unless Congress enacts changes).
Single Filers — 2025 Federal Income Tax Brackets
| Tax Rate | Taxable Income Range | Tax Owed on Bracket |
| 10% | $0 – $11,925 | $0 + 10% of amount over $0 |
| 12% | $11,926 – $48,475 | $1,192.50 + 12% over $11,925 |
| 22% | $48,476 – $103,350 | $5,578.50 + 22% over $48,475 |
| 24% | $103,351 – $197,300 | $17,651.50 + 24% over $103,350 |
| 32% | $197,301 – $250,525 | $40,199.50 + 32% over $197,300 |
| 35% | $250,526 – $626,350 | $57,231.50 + 35% over $250,525 |
| 37% | Over $626,350 | $188,769.75 + 37% over $626,350 |
Married Filing Jointly — 2025 Federal Income Tax Brackets
| Tax Rate | Taxable Income Range | Tax Owed on Bracket |
| 10% | $0 – $23,850 | $0 + 10% of amount over $0 |
| 12% | $23,851 – $96,950 | $2,385 + 12% over $23,850 |
| 22% | $96,951 – $206,700 | $11,157 + 22% over $96,950 |
| 24% | $206,701 – $394,600 | $35,302 + 24% over $206,700 |
| 32% | $394,601 – $501,050 | $80,398 + 32% over $394,600 |
| 35% | $501,051 – $751,600 | $114,462 + 35% over $501,050 |
| 37% | Over $751,600 | $202,154.50 + 37% over $751,600 |
How marginal rates work — only OT dollars above threshold are taxed higher
A common misconception is that moving into a higher bracket means all of your income is taxed at that higher rate. That is not how the system works. Only the dollars that fall within the higher bracket are taxed at the higher rate. Every dollar below that threshold remains taxed at the lower rate. Overtime earnings sit at the top of your income stack, so they are the first dollars to spill into the next bracket — but your existing income below the threshold is unaffected.
Bracket creep example — $20/hr worker adding 10 OT hours per week
| Bracket Creep Illustration — $20/hr, Single Filer |
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Regular pay: $20/hr × 40 hrs × 52 weeks = $41,600/year Standard deduction 2025 (single): $15,000 Taxable income (regular): $41,600 − $15,000 = $26,600 → 12% bracket Add 10 OT hours/week: $30/hr × 10 × 52 = $15,600 additional income New taxable income: $26,600 + $15,600 = $42,200 Portion in 12% bracket: $48,475 − $26,600 = $21,875 of OT income Portion pushed to 22% bracket: $15,600 − $21,875 = $0 in this scenario Result: All OT income stays in 12% bracket at this pay level Threshold to 22% bracket: Taxable income must exceed $48,475 (single) |
| Key insight: At $20/hr, 10 OT hours/week does NOT trigger 22% bracket for this worker in 2025. |
FICA Taxes on Overtime — Social Security & Medicare
Regardless of the OBBBA deduction or your income tax bracket, FICA payroll taxes apply to all overtime wages. These are separate from income tax and are withheld from every paycheck.
Social Security (6.2%) and Medicare (1.45%) still apply to all OT
Your employer withholds 6.2% for Social Security and 1.45% for Medicare on every dollar you earn, including overtime. Your employer matches these amounts. If you are self-employed, you pay both sides (15.3% total). There is no OBBBA exemption for FICA — the deduction reduces federal income tax only, not payroll taxes.
Additionally, if your total wages exceed $200,000 in 2025 (single) or $250,000 (MFJ), an Additional Medicare Tax of 0.9% applies to earnings above those thresholds. This surtax is not matched by your employer.
Social Security wage base cap for 2025 ($176,100)
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2025 Social Security Wage Base The Social Security wage base for 2025 is $176,100. You pay 6.2% Social Security tax on earnings up to this amount only. Once your total wages — including overtime — exceed $176,100 for the year, Social Security tax stops being withheld. Medicare tax at 1.45% has no wage cap and continues on all earnings including overtime above $176,100. |
The OBBBA Offset — Reduce Your Overtime Tax Bill With the No-Tax Deduction
The One Big Beautiful Bill Act (P.L. 119-21) created a federal income tax deduction for qualified overtime premiums earned in tax years 2025–2028. Use the no tax on overtime calculator to compute your exact deduction amount.
What the deduction covers and does NOT cover (FICA still owed)
The OBBBA deduction applies only to the FLSA overtime premium — the 0.5× extra portion of time-and-a-half pay. It does not cover your full overtime wages. It also does not reduce FICA taxes. Here is a clear breakdown:
| Tax Type | OBBBA Deduction Applies? | Notes |
| Federal income tax | Yes — reduces taxable income | Deduct OT premium, up to cap |
| Social Security (6.2%) | No | Applies to all OT earnings |
| Medicare (1.45%) | No | Applies to all OT earnings, no cap |
| Additional Medicare (0.9%) | No | Applies above $200K/$250K |
| State income tax | Varies by state | Most states have not conformed |
Deduction cap and MAGI phase-out recap
The deduction is capped at $12,500 for single filers and $25,000 for married filing jointly. It phases out ratably for single filers with MAGI above $150,000 and for MFJ filers with MAGI above $300,000. Only W-2 employees earning FLSA-mandated overtime qualify. Self-employed workers and exempt employees do not qualify.
Overtime Tax — 3 Worked Examples
Example 1 — $18/hr worker, 15 hours OT, single filer, 22% bracket
| Example 1 — Hourly Worker, Single, 22% Bracket |
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Regular rate: $18.00/hr | OT rate: $27.00/hr | Filing: Single Regular annual income: $18 × 40 × 52 = $37,440 OT income: $27 × 15 × 52 = $21,060 Gross income: $37,440 + $21,060 = $58,500 Standard deduction (2025, single): $15,000 Taxable income: $58,500 − $15,000 = $43,500 → 12% bracket (under $48,475) Federal income tax owed: $1,192.50 + 12% × ($43,500 − $11,925) = $4,981.50 FICA on OT: Social Security $21,060 × 6.2% = $1,305.72 | Medicare $21,060 × 1.45% = $305.37 OBBBA deduction: OT premium = $9 × 15 × 52 = $7,020 (under $12,500 cap) Tax saving from OBBBA: $7,020 × 12% = $842.40 |
| Total estimated federal income tax (after OBBBA): ~$4,139. FICA on OT: ~$1,611. FICA is NOT reduced by OBBBA. |
Example 2 — $30/hr nurse, 20 hours OT, MFJ, with OBBBA deduction applied
| Example 2 — Nurse, Married Filing Jointly, OBBBA Applied |
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Regular rate: $30.00/hr | OT rate: $45.00/hr | Filing: MFJ Spouse income: $55,000/year Nurse regular income: $30 × 40 × 52 = $62,400 Nurse OT income: $45 × 20 × 52 = $46,800 Combined gross income: $62,400 + $46,800 + $55,000 = $164,200 Standard deduction (2025, MFJ): $30,000 Taxable income before OBBBA: $164,200 − $30,000 = $134,200 → 22% bracket OBBBA deduction: OT premium = $15 × 20 × 52 = $15,600. Capped at $12,500 (MFJ cap = $25,000, but nurse’s premium under joint cap) Taxable income after OBBBA: $134,200 − $15,600 = $118,600 MAGI: $164,200 — below $300,000 MFJ threshold, no phase-out Federal tax saving from deduction: $15,600 × 22% = $3,432 |
| OBBBA saves this household $3,432 in federal income tax. FICA on OT still owed: ~$3,141 combined. |
Example 3 — High earner, $160K MAGI, partial phase-out calculated
| Example 3 — Single Filer, MAGI $160,000, Phase-Out Applied |
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Regular rate: $60.00/hr | OT premium earned: $12,500 (at cap) MAGI: $160,000 | Filing: Single | Phase-out threshold: $150,000 Excess MAGI: $160,000 − $150,000 = $10,000 above threshold Per IRS Notice 2025-69, deduction phases out ratably above threshold Phase-out reduces deduction proportionally (exact worksheet per IRS Form 1040 instructions) Estimated deduction remaining: approximately $10,000–$11,500 (partial phase-out) Tax bracket: 24% (taxable income in $103,351–$197,300 range) Estimated federal income tax saving: ~$10,000 × 24% = $2,400 (conservative estimate) |
| High earners near the $150K threshold lose only a portion of the deduction, not all of it. A tax professional can compute the precise IRS worksheet reduction. |
Do State Taxes Apply to Overtime Pay?
Yes — in most states, overtime pay is treated as regular income and taxed at your state’s ordinary income tax rate. However, workers in nine states pay no state income tax at all, and a small but growing number of states have enacted their own overtime tax deductions modeled after the OBBBA.
States with no income tax (9 states — no OT tax at all)
Workers in the following nine states pay no state income tax on any wages, including overtime:
| State | State Income Tax | OT State Tax |
| Alaska | None | No state OT tax |
| Florida | None | No state OT tax |
| Nevada | None | No state OT tax |
| New Hampshire | None (wages) | No state OT tax on wages |
| South Dakota | None | No state OT tax |
| Tennessee | None (wages) | No state OT tax on wages |
| Texas | None | No state OT tax |
| Washington | None | No state OT tax |
| Wyoming | None | No state OT tax |
States that have passed their own OT deduction (2025–2026 tracker)
Following the OBBBA’s enactment, several states introduced or passed legislation to provide a parallel state-level overtime income deduction. As of March 2026:
- Georgia: Enacted a state overtime deduction for tax year 2025 aligned with federal OBBBA rules.
- Arkansas: Enacted exemption from state income tax for FLSA overtime premium wages effective 2025.
- West Virginia: Passed conforming legislation for 2025–2026 tax years.
- Alabama: Passed a state overtime exemption effective 2023 (predates OBBBA; already in effect).
- Montana, Mississippi, Nebraska: Legislation introduced in 2025–2026 sessions; status pending as of March 2026.
- California, New York, Illinois: No conforming legislation enacted or expected in the near term.
Always verify with your state’s department of revenue, as legislative status changes. The IRS provides no guidance on state conformity — state treatment is entirely independent.
Overtime Tax Rate Table — Federal + FICA Combined
The table below shows the total effective tax burden on overtime dollars across common income levels for a single filer in 2025, combining the marginal federal income tax rate and FICA taxes. This is the rate applied to each additional overtime dollar at that income level.
| Total Income Level | Federal Marginal Rate | Social Security | Medicare | Combined OT Rate |
| Under $48,475 (taxable) | 12% | 6.2% | 1.45% | ~19.65% |
| $48,476 – $103,350 (taxable) | 22% | 6.2% | 1.45% | ~29.65% |
| $103,351 – $176,100 wages | 24% | 6.2% | 1.45% | ~31.65% |
| $176,101 – $197,300 (taxable) | 24% | 0% (SS capped) | 1.45% | ~25.45% |
| $197,301 – $200,000 | 32% | 0% (SS capped) | 1.45% | ~33.45% |
| $200,001 – $250,525 | 32% | 0% | 1.45% + 0.9% | ~34.35% |
| Over $250,525 (taxable) | 35%+ | 0% | 2.35% | ~37.35%+ |
Note: These rates apply to marginal overtime dollars, not to all income. The OBBBA deduction can reduce the effective federal income tax component for qualifying workers, but does not affect the FICA columns above.
Frequently Asked Questions — Overtime Tax 2025–2026
Is overtime pay taxed at a higher rate than regular pay?
No. Overtime pay is taxed as ordinary income under the same federal tax brackets as regular wages. There is no special IRS overtime tax rate. However, because overtime increases your total annual income, those additional dollars may fall into a higher marginal bracket than your regular wages. Only the dollars above the bracket threshold are taxed at the higher rate — not your entire income.
How much federal tax will I pay on my overtime in 2025?
It depends on your total taxable income and filing status. Overtime dollars are taxed at your marginal federal income tax rate for 2025: 10%, 12%, 22%, 24%, 32%, 35%, or 37%. For most hourly workers earning under $100,000 combined, overtime income falls in the 12% or 22% bracket. Add 7.65% for FICA (Social Security + Medicare) on top of that for your total withholding rate on OT dollars.
Do I still pay Social Security and Medicare tax on overtime?
Yes, always. FICA taxes — Social Security at 6.2% (up to the $176,100 2025 wage base) and Medicare at 1.45% (uncapped) — apply to all overtime earnings. There is no exemption or reduction for overtime pay under the payroll tax rules. These are withheld from your paycheck by your employer regardless of any income tax deductions you may claim, including the OBBBA deduction.
Does the OBBBA no-tax deduction eliminate FICA on overtime?
No. The OBBBA deduction (P.L. 119-21) reduces your federal income taxable income only. It does not reduce Social Security or Medicare (FICA) taxes. FICA taxes are payroll taxes governed by a separate section of the tax code and are not affected by above-the-line income tax deductions. Every dollar of overtime you earn still has 7.65% withheld for FICA, regardless of the deduction.
Can overtime push me into a higher tax bracket?
Yes — but only the overtime dollars that cross the bracket threshold are taxed at the higher rate. For example, a single filer with $44,000 in taxable income who earns $10,000 in overtime will have approximately $5,475 taxed at 22% (the amount over the $48,475 threshold) and the rest at 12%. The full $10,000 of overtime is not taxed at 22% — only the portion that exceeds the bracket floor.
Does my state tax my overtime pay?
In most states, yes — overtime is treated as ordinary income and taxed at your state’s income tax rate. Nine states have no state income tax at all (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming). Several states including Alabama, Arkansas, Georgia, and West Virginia have enacted overtime-specific exemptions or deductions as of 2025–2026. Check your state revenue department for current rules.
What is the Social Security wage base cap for 2025?
The Social Security wage base for 2025 is $176,100. You pay Social Security tax at 6.2% on the first $176,100 of wages, including overtime. Once your combined wages exceed this threshold for the year, Social Security withholding stops. Medicare tax at 1.45% has no wage cap and continues on all earnings above $176,100. The Additional Medicare Tax of 0.9% applies above $200,000 (single) or $250,000 (MFJ).
How do I reduce the taxes I pay on overtime income?
Several strategies can reduce your overtime tax burden: (1) Claim the OBBBA overtime premium deduction if you qualify — up to $12,500 single or $25,000 MFJ. (2) Maximize pre-tax retirement contributions (401k, HSA) to reduce your taxable income. (3) If your overtime consistently pushes you into a higher bracket, adjust your W-4 withholding to avoid underpayment penalties. Use the annual income calculator to model your full-year net income under different overtime scenarios.
About This Calculator
The IntelCalculator Overtime Tax Calculator uses 2025–2026 IRS federal income tax brackets (Rev. Proc. 2024-61) and FICA rates (Social Security 6.2% up to $176,100 wage base; Medicare 1.45% uncapped). The OBBBA overtime deduction figures reference IRS Notice 2025-69 and P.L. 119-21 Section 70202 (IRC §225). FICA taxes apply to all overtime earnings regardless of the OBBBA deduction. State tax treatment varies by state and is not included in the federal calculation. This tool is for informational and estimation purposes only and does not constitute tax, legal, or financial advice. Consult a qualified tax professional for personalised guidance.
Sources: IRS.gov (Rev. Proc. 2024-61, Notice 2025-69), SSA.gov, P.L. 119-21
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Key rules, thresholds, FICA limits, and strategies for 2026
Federal Tax = Sum of (income in each bracket x bracket rate)
Marginal Rate = Rate of the highest bracket reached
Effective Rate = Total Federal Tax / Total Taxable Income
FICA = min(wages, $176,100) x 6.2% + wages x 1.45%
Additional Medicare = max(0, wages - threshold) x 0.9%
SE Tax = Net SE Income x 0.9235 x 15.3%
Net Pay = Gross - Federal Tax - State Tax - FICA - Pre-tax deductions