Last updated: January 2026 · FLSA · DOL · OBBBA 2026 verified
Overtime Pay Calculator 2026
Calculate FLSA overtime pay — time and a half for hours over 40 per week. Covers hourly workers, salaried non-exempt employees, and the new 2026 OBBBA overtime tax deduction. Includes California daily overtime rules and annual overtime projection.
FLSA Overtime Pay Formula — How It Works
Federal overtime under the Fair Labor Standards Act (FLSA) requires employers to pay non-exempt employees at least 1.5 times their regular rate for all hours worked beyond 40 in a single workweek. The workweek is a fixed, recurring 7-day period — not a calendar week or pay period.
Hourly Employee OT
Salaried Non-Exempt OT
Worked example — $22.50/hr, 48 hours worked in one week
New 2026 Overtime Tax Deduction — OBBBA
2026 Overtime Tax Deduction New for 2026
The One Big Beautiful Bill Act (OBBBA) created a new federal income tax deduction for qualified overtime compensation starting with the 2025 tax year, continuing in 2026. This deduction reduces your federal taxable income by the overtime premium — the extra 0.5× portion above straight time.
What qualifies: The overtime premium paid above the regular rate — specifically the 0.5× portion for FLSA-required overtime. If you earn $22/hr and work 10 overtime hours: total overtime pay = $330 (10 × $33). Qualified deduction amount = $110 (the 0.5× premium: 10 × $22 × 0.5). This $110 is deductible from federal taxable income per IRS Notice 2025-69.
| Hourly rate | OT hours/week | Total OT pay | Deductible premium (0.5×) | Federal tax saved (22%) |
|---|---|---|---|---|
| $18.00/hr | 5 hrs | $135.00 | $45.00 | $9.90/week |
| $22.50/hr | 8 hrs | $270.00 | $90.00 | $19.80/week |
| $28.00/hr | 10 hrs | $420.00 | $140.00 | $30.80/week |
| $35.00/hr | 10 hrs | $525.00 | $175.00 | $38.50/week |
| $45.00/hr | 15 hrs | $1,012.50 | $337.50 | $74.25/week |
Tax savings assume 22% marginal federal rate. Actual savings vary by bracket. Annual deduction = weekly premium × weeks with overtime. Consult a tax professional for filing guidance.
Overtime Pay Reference Table — Common Hourly Rates
All figures use the FLSA standard 1.5× overtime rate for hours over 40 per week. Gross pay before taxes. For net pay after FICA and federal income tax use the take-home pay calculator.
| Regular rate | Regular pay (40 hrs) | +5 OT hrs | +8 OT hrs | +10 OT hrs | +15 OT hrs |
|---|---|---|---|---|---|
| $15.00/hr | $600 | $712.50 | $780 | $825 | $937.50 |
| $18.00/hr | $720 | $855 | $936 | $990 | $1,125 |
| $20.00/hr | $800 | $950 | $1,040 | $1,100 | $1,250 |
| $22.50/hr | $900 | $1,068.75 | $1,170 | $1,237.50 | $1,406.25 |
| $25.00/hr | $1,000 | $1,187.50 | $1,300 | $1,375 | $1,562.50 |
| $29.90/hr (US median) | $1,196 | $1,420.25 | $1,554.80 | $1,643.50 | $1,868 |
| $35.00/hr | $1,400 | $1,662.50 | $1,820 | $1,925 | $2,187.50 |
| $40.00/hr | $1,600 | $1,900 | $2,080 | $2,200 | $2,500 |
| $50.00/hr | $2,000 | $2,375 | $2,600 | $2,750 | $3,125 |
How Non-Discretionary Bonuses Affect the Overtime Rate
Most overtime calculators ignore one of the most commonly litigated FLSA issues: non-discretionary bonuses must be included in the regular rate before calculating overtime. If you receive a bonus that employees are led to expect — production bonuses, attendance bonuses, safety bonuses, shift differentials — it must be factored into the overtime calculation.
Bonus rate adjustment example — $20/hr base, 45 hours, $200 attendance bonus
FLSA Overtime Exemption — Who Qualifies in 2026
The FLSA exempts certain employees from overtime requirements when they meet all three tests simultaneously. Meeting only one or two tests is not sufficient for exemption.
| Test | Requirement | 2026 threshold |
|---|---|---|
| Salary level test | Must earn at least the minimum salary threshold on a salary or fee basis | $684/week ($35,568/year) |
| Salary basis test | Must be paid a predetermined, fixed salary not subject to reduction based on quality or quantity of work | Salary must not be docked for partial-day absences |
| Duties test | Primary job duties must meet the criteria for executive, administrative, professional, outside sales, or computer employee exemption per 29 CFR §541 | No dollar threshold — based on actual job duties |
State Overtime Rules — Where States Exceed Federal FLSA
Federal FLSA sets the minimum overtime standard. States may provide greater protection — employees are entitled to whichever standard is more beneficial. Several states have daily overtime requirements that the federal FLSA does not have.
California — Most Protective
Daily overtime: 1.5× for hours 8–12 in a day; 2× for hours over 12 in a day. Weekly: 1.5× for hours 41–48; 2× for hours 49+. 7th consecutive workday: 1.5× first 8 hours, 2× above 8 hours. Tip credit prohibited — full minimum wage for overtime base.
Nevada
Daily overtime: 1.5× for hours over 8 in a day for employees earning below 1.5× the state minimum wage. Employees earning above that threshold are exempt from daily overtime but still subject to the 40-hour weekly rule.
Alaska
Daily overtime: 1.5× for hours over 8 in a workday, in addition to the standard weekly overtime threshold of 40 hours. Employees receive whichever produces the greater overtime earnings.
All Other States
Follow the federal FLSA standard: 1.5× for hours over 40 per workweek. No daily overtime requirement. Some states have higher minimum wages that affect the base for overtime calculations — always use the applicable state minimum wage where higher than $7.25/hr federal.
Annual Overtime Earnings Projection
If you regularly work overtime, the annual earnings impact is significant. The table below shows how much overtime adds to yearly gross income at common hourly rates. These are gross figures before taxes — for net impact see the take-home pay calculator with your new gross.
| Hourly rate | 5 OT hrs/week × 52 | 8 OT hrs/week × 52 | 10 OT hrs/week × 52 |
|---|---|---|---|
| $15.00/hr | +$5,850/yr | +$9,360/yr | +$11,700/yr |
| $18.00/hr | +$7,020/yr | +$11,232/yr | +$14,040/yr |
| $22.50/hr | +$8,775/yr | +$14,040/yr | +$17,550/yr |
| $29.90/hr (median) | +$11,661/yr | +$18,658/yr | +$23,322/yr |
| $35.00/hr | +$13,650/yr | +$21,840/yr | +$27,300/yr |
| $40.00/hr | +$15,600/yr | +$24,960/yr | +$31,200/yr |
Assumes 52 overtime weeks per year. Real annual overtime earnings depend on actual weeks worked. Add overtime earnings to base salary using the annual salary calculator for a combined annual income figure.
Overtime Pay Calculator — FAQ
How is overtime pay calculated under FLSA?
Under the FLSA, overtime = 1.5× the regular rate for all hours over 40 in a workweek. Formula: Overtime pay = overtime hours × (regular rate × 1.5). Example: $22.50/hr regular rate, 7 overtime hours. Overtime pay = 7 × $33.75 = $236.25. Total weekly pay = (40 × $22.50) + $236.25 = $1,136.25. Use the calculator above for instant results.
What is the new 2026 overtime tax deduction?
The OBBBA created a new federal income tax deduction for qualified overtime compensation — specifically the premium portion (the extra 0.5× above straight time). For an employee earning $22/hr working 10 overtime hours: total OT pay = $330 (10 × $33), deductible premium = $110 (10 × $22 × 0.5). This $110 reduces federal taxable income per IRS Notice 2025-69. At a 22% marginal rate, this saves $24.20 per week in federal income tax on 10 overtime hours at $22/hr.
Does overtime apply to salaried employees?
Yes, if the salaried employee earns below $684/week ($35,568/year) and their duties do not qualify for an FLSA exemption. For salaried non-exempt workers: regular hourly rate = weekly salary ÷ 40. Then 1.5× that rate for hours over 40. A $600/week salaried worker has a $15/hr regular rate — overtime hours are paid at $22.50/hr. Salaried workers above $35,568 may still be entitled to overtime if their job duties do not pass the executive, administrative, or professional duties test.
How does a non-discretionary bonus affect overtime rate?
Non-discretionary bonuses must be added to straight-time earnings before calculating the regular rate for overtime. Add the bonus to base straight-time pay, divide by total hours to get the adjusted regular rate, then pay 0.5× the adjusted rate on overtime hours. Example: $20/hr, 45 hours, $200 bonus. Total = $1,100. Adjusted rate = $1,100 ÷ 45 = $24.44/hr. Additional OT premium = 5 × $12.22 = $61.10. Without the adjustment, the employer underpays by $61.10 — a common FLSA violation.
What is the FLSA overtime exemption threshold in 2026?
The current threshold is $684/week ($35,568/year) after the 2024 DOL rule raising it to $1,128/week was vacated by a federal court in Texas in November 2024. To be exempt, an employee must earn at least $684/week AND pass the duties test (executive, administrative, professional, outside sales, or computer employee per 29 CFR §541). Salary alone does not determine exemption — duties matter equally. State thresholds may be higher: California is $66,560, Washington and New York are higher still.
What are California's overtime rules in 2026?
California requires: 1.5× for hours over 8 in a single workday; 1.5× for hours 41–48 in a workweek; 2× for hours over 12 in a single workday; 2× for all hours on the 7th consecutive workday; 1.5× for the first 8 hours on the 7th consecutive day. California also bans the tip credit — tipped employees receive the full $16.50 state minimum wage as the overtime base. Always apply whichever standard — federal or state — provides greater protection to the employee.
Is overtime pay taxed differently than regular pay?
Overtime pay is taxed as ordinary income at your marginal federal rate plus FICA (7.65%) and state income tax — there is no separate overtime tax rate. However, the 2026 OBBBA overtime deduction reduces federal taxable income by the premium portion of qualifying overtime pay (the 0.5× above straight time). This effectively lowers the federal tax burden on overtime for most workers. Use the take-home pay calculator with your new gross (including overtime) for an exact net figure.
How much does overtime add to annual income?
At $22.50/hr: 5 OT hours/week × 52 = +$8,775/year. 10 OT hours/week × 52 = +$17,550/year. These are gross figures before tax. The new 2026 OBBBA overtime deduction reduces the tax on the premium portion, so net overtime income is slightly higher than prior years for the same gross earnings. See the annual projection table above for common hourly rates. Add overtime income to your base salary and enter the total in the annual salary calculator for your complete annual earnings breakdown.