The real value of extra hours
How overtime is taxed in 2026
Overtime pay is not taxed at a special rate. Every overtime dollar is treated as ordinary wage income by the IRS, subject to the same progressive federal brackets and FICA withholding as your regular pay. The difference is that overtime dollars land on top of your base salary, so they are taxed at your marginal rate rather than your lower average rate. This calculator isolates that marginal impact.
Why overtime feels "heavily taxed"
If your base 40-hour salary puts you in the 12% bracket, modest overtime may still sit in that same bracket. But a $25/hour worker with 40 regular hours earns $52,000 a year, which means taxable income of $35,900 after the $16,100 standard deduction (single, 2026). That is already in the 12% bracket approaching the $50,400 threshold. Add 8 hours of overtime at $37.50 and annual gross rises to $67,600, pushing taxable income to $51,500 and crossing into the 22% bracket. Every OT dollar above that line loses 22% to federal tax plus 7.65% to FICA, totaling nearly 30%.
| Hourly rate | Gross OT/hr (1.5x) | Approx. net OT/hr | Tax bite on OT |
|---|---|---|---|
| $18 | $27.00 | ~$21.67 | ~19.7% (12%+FICA) |
| $25 | $37.50 | ~$26.34 | ~29.7% (22%+FICA) |
| $35 | $52.50 | ~$36.88 | ~29.7% (22%+FICA) |
| $50 | $75.00 | ~$50.14 | ~33.1% (24%+FICA) |
Single filer, no state tax, 2026 federal brackets + 7.65% FICA. Actual marginal rate depends on total annual income.
When overtime truly nets less per hour
The only scenario where overtime is a bad deal purely on taxes is if you are near a benefits cliff (like an ACA premium credit threshold) where extra income triggers a subsidy loss that outweighs the after-tax OT gain. For straight tax purposes, you always keep the majority of every overtime dollar.
Questions
Overtime after taxes FAQ
How much of my overtime do I actually keep after taxes?
You keep your overtime gross minus taxes at your marginal rate. For a worker in the 22% federal bracket earning under $184,500, each overtime dollar loses 22% federal tax plus 7.65% FICA, leaving about 70 cents. At time-and-a-half, a $25/hour worker grosses $37.50 per OT hour and takes home roughly $26.34 after taxes.
Is overtime taxed at a higher rate than regular pay?
No. There is no special overtime tax rate. Overtime is taxed at the same progressive federal rates as regular wages. It can feel heavier because overtime dollars stack on top of your regular earnings and may fall in a higher marginal bracket, but only the dollars crossing a bracket threshold pay the higher rate.
Why does my overtime paycheck seem so small?
Two reasons. First, overtime income often sits in your highest marginal bracket, so the federal bite is larger per dollar than your average rate on base pay. Second, FICA (6.2% Social Security plus 1.45% Medicare) applies to every overtime dollar up to the $184,500 wage base. Combined, you may lose 30% or more of each OT dollar to taxes.
Does overtime push me into a higher tax bracket?
It can, but only the income above the bracket threshold is taxed at the higher rate — not your entire paycheck. For example, if your regular 40-hour salary puts you at $50,000 taxable and overtime adds $10,000, only the dollars above $50,400 (the 22% bracket floor for single filers in 2026) are taxed at 22% rather than 12%.
How do I calculate net overtime pay per hour?
Multiply your hourly rate by the overtime multiplier (usually 1.5) to get the gross OT rate. Then subtract federal tax at your marginal bracket rate and 7.65% for FICA. The result is your net OT rate per hour. This calculator does it automatically using the full 2026 bracket schedule.
At what income does overtime stop paying Social Security tax?
Once your total wages for the year reach the Social Security wage base — $184,500 in 2026 — you stop paying the 6.2% Social Security tax on additional earnings including overtime. Medicare (1.45%) has no cap and continues on all wages, with an extra 0.9% above $200,000 for single filers.
- Sources: U.S. DOL FLSA overtime rules · IRS Rev. Proc. 2025-32 (2026 brackets) · SSA 2026 wage base $184,500 · FICA 6.2% + 1.45%.
- 🔄 Last updated July 2026 · Tax year 2026
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