💰 Overtime Tax Credit Calculator
Calculate your overtime pay tax implications and understand how overtime affects your take-home pay in the United States (2026 Tax Year)
📊 Calculate Your Overtime Tax
💵 Your Results
📚 Understanding Overtime Tax Credits
What is Overtime Pay?
Under the Fair Labor Standards Act (FLSA), non-exempt employees must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay. Overtime pay is subject to the same federal income tax, Social Security, and Medicare taxes as regular wages.
⚠️ Important: No Special “Overtime Tax Credit”
There is no special federal tax credit specifically for overtime pay. Overtime income is taxed at your regular marginal tax rate. However, understanding how overtime affects your overall tax bracket and take-home pay is crucial for financial planning.
How Overtime Affects Your Taxes
Overtime pay can push you into a higher tax bracket since it increases your total annual income. This calculator helps you understand the true cost of overtime by showing you exactly how much of your overtime pay goes to federal taxes, FICA (Social Security and Medicare), and state taxes.
2024 Federal Tax Brackets
The United States uses a progressive tax system. Your income is taxed at different rates as it crosses into higher brackets. This calculator uses the 2024 tax brackets to provide accurate estimates of your federal tax liability based on your filing status and total income including overtime.
FICA Taxes on Overtime
Overtime pay is subject to FICA taxes: 6.2% for Social Security (up to the wage base limit of $168,600 for 2024) and 1.45% for Medicare (with an additional 0.9% Medicare tax on earnings over $200,000 for single filers or $250,000 for married filing jointly).
❓ Frequently Asked Questions
No, overtime is not taxed at a higher rate. It’s a common misconception. Overtime pay is taxed at the same marginal tax rate as your regular income. However, because overtime increases your total income, it may push some of your earnings into a higher tax bracket, which can make it seem like overtime is taxed more heavily.
There is no specific federal tax credit for overtime work. However, you may be eligible for other tax credits based on your total income, such as the Earned Income Tax Credit (EITC), Child Tax Credit, or education credits. These credits are based on your total annual income, which includes overtime pay.
While you can’t avoid taxes on overtime, you can reduce your taxable income by: (1) Contributing to a 401(k) or traditional IRA, (2) Contributing to a Health Savings Account (HSA), (3) Taking advantage of pre-tax benefits like flexible spending accounts, and (4) Claiming all eligible deductions and credits on your tax return.
Your employer’s payroll system may withhold taxes based on the assumption that your overtime pay will continue throughout the year. This can result in higher withholding in that specific paycheck. However, when you file your annual tax return, you’ll only pay taxes based on your actual total income for the year, and you may receive a refund if too much was withheld.
Most states with income tax treat overtime the same as regular income. However, nine states have no state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. If you live in one of these states, you won’t pay state income tax on your overtime pay.
Gross pay is your total earnings before any deductions. Take-home pay (net pay) is what you actually receive after federal income tax, FICA taxes (Social Security and Medicare), state income tax, and any other deductions (like health insurance or retirement contributions) are subtracted from your gross pay.
This calculator provides estimates based on 2024 federal tax brackets and standard FICA tax rates. Actual tax liability may vary based on deductions, credits, and other factors specific to your situation. For precise tax planning, consult with a qualified tax professional or use IRS tax preparation software.
This calculator estimates your annual tax burden based on consistent weekly overtime hours. If your overtime varies, you can adjust the weekly overtime hours to reflect your average. Remember that your actual tax liability is calculated on your total annual income when you file your tax return, regardless of when you earned it during the year.