Overtime Pay Calculator Guide (2026): How It Works, Examples & State Calculators

How to calculate overtime pay

Under the federal Fair Labor Standards Act (FLSA), all non-exempt employees must receive overtime pay for all hours worked in excess of 40 during a designated 7-day workweek. To calculate overtime pay accurately, a calculator executes four sequential mathematical steps:

1. Determine Total Straight-Time Hours and Earnings: Record all physical hours worked up to 40. Unworked hours such as paid time off (PTO), sick leave, and holidays do not count toward the 40-hour overtime threshold.
2. Compute the Statutory Regular Rate of Pay: If you earn an hourly wage with no other pay, your regular rate equals your hourly rate. However, under 29 U.S.C. § 207(e), any non-discretionary bonuses, shift differentials, or commissions earned during that workweek must be added into your straight-time pay and divided across all hours worked.
3. Calculate the Overtime Premium: Multiply your regular rate by 1.5 for standard overtime hours (hours 41 and above). In California, daily hours between 8 and 12 also trigger this 1.5× rate.
4. Sum Gross Pay: Combine your straight-time pay for the first 40 hours with your overtime pay for all hours beyond 40:
   Total Gross Pay = (40 × Regular Rate) + (Overtime Hours × Regular Rate × 1.5)

This represents the short formula. When an employee earns production bonuses, piece rates, or multiple hourly rates in the same pay period, the regular rate formula requires weighted division. For the exhaustive mathematical proof, legal definitions, and multi-tier calculation examples, read our dedicated guide on how overtime pay is calculated.

How is overtime pay calculated for taxes?

A common surprise for workers receiving an overtime check is that their take-home pay is significantly lower than gross earnings. Understanding how payroll software computes taxes on overtime prevents confusion and highlights the difference between gross overtime pay and net take-home pay:

• Gross Overtime Pay: The total dollar compensation earned before any mandatory deductions or payroll taxes are withheld.
• Net Overtime Pay: The actual cash deposited into your bank account after all federal, state, local, and payroll taxes are subtracted.

Federal and State Withholding Annualization

Overtime pay is not taxed at a separate or higher federal rate. Overtime is ordinary earned income taxed under the exact same progressive tax brackets (10%, 12%, 22%, 24%, 32%, 35%, and 37%) as standard wages.

However, under IRS Publication 15-T rules, payroll software calculates federal withholding on a paycheck-by-paycheck basis using annualization formulas. When you log 10 or 15 hours of overtime in a single week, the software multiplies that inflated weekly gross check by 52 (or by 26 for biweekly checks) and withholds taxes as if you earned that elevated salary for the entire year. While this can push that specific check into a higher withholding bracket (such as 22% instead of 12%), any excess tax withheld above your true annual liability is refunded to you when you file your tax return. For a detailed breakdown of bracket math, see our guide on is overtime taxed more than regular pay.

Mandatory FICA Deductions (7.65%)

Every dollar of overtime pay is subject to mandatory payroll withholding under the Federal Insurance Contributions Act (FICA):

• Social Security Tax: 6.2% on all earnings up to the statutory wage base limit ($184,500 in 2026).
• Medicare Tax: 1.45% on all earnings with no annual cap (plus a 0.9% Additional Medicare Tax for earnings exceeding $200,000 for single filers or $250,000 for joint filers).

The 2025–2028 OBBBA § 225 Federal Overtime Tax Deduction

Under the One Big Beautiful Bill Act (OBBBA § 225), Congress established a temporary federal tax deduction for overtime pay covering tax years 2025 through 2028. However, strict statutory limitations apply:

Crucially, state-mandated extras—such as California daily overtime under 40 weekly hours, 7th consecutive day premiums, and all 2.0× double-time pay—do not qualify for this federal tax deduction. To see your potential tax savings and estimate your eligible deduction, use our dedicated no tax on overtime calculator.

Worked example

To illustrate how an overtime pay calculator computes both gross earnings and estimated tax withholdings, consider an hourly employee earning $18.00 per hour who works 45 hours during a standard 7-day workweek:

Biweekly overtime — the 40-hour rule is weekly, never averaged over two weeks

One of the most persistent payroll myths in American workplaces involves biweekly pay schedules. Millions of workers receive paychecks every two weeks (26 pay periods per year) and mistakenly believe their overtime threshold is 80 hours per pay period.

Under federal FLSA regulations (29 C.F.R. § 778.104), the 40-hour overtime rule is strictly weekly. Overtime cannot be averaged over two weeks under any circumstances:

Consider this classic biweekly payroll violation:

• Week 1: You work 50 hours (10 hours over the 40-hour threshold).
• Week 2: You work 30 hours.
• Biweekly Total: 80 hours worked across the two-week pay period.

An employer who calculates pay based on 80 biweekly hours would pay 80 straight-time hours and $0 overtime. This is illegal wage theft under federal law. The employer is legally required to pay 40 regular hours and 10 overtime hours (at 1.5×) for Week 1, plus 30 regular hours for Week 2. When using an overtime pay calculator, you must always evaluate each 7-day workweek independently.

Overtime pay calculator by state

While the federal FLSA sets the national baseline of 1.5× after 40 hours per week, individual states maintain their own wage and hour statutes. Some states mandate daily overtime after 8 or 12 hours, enforce statutory double time, or exempt overtime from state income tax.

Explore our dedicated overtime calculators for all 27 active state jurisdictions below. Each tool applies governing state labor codes, state minimum wages, and state tax withholding algorithms:

Working in California? Because California enforces the nation's strictest wage protections—including mandatory 1.5× daily overtime after 8 hours and 2.0× statutory double time after 12 hours under Labor Code § 510—we offer both a specialized California overtime calculator and our comprehensive step-by-step California overtime calculator guide featuring worked examples, 7th-day math, and regular rate bonus formulas.

Specialty Overtime Calculators

Certain employment relationships, union agreements, and industry pay practices require specialized overtime engines. Access our dedicated specialist calculators:

Overtime pay for salaried employees

A widespread workplace misconception is that receiving a fixed salary automatically waives your right to overtime pay. Under federal labor law, job title and salary status do not dictate overtime exemption.

To be lawfully exempt from overtime under the FLSA, an employee must satisfy two rigorous statutory requirements:

1. The Salary-Level Test: The employee must earn a guaranteed salary of at least $684 per week ($35,568 annually under restored federal baseline rules), or substantially higher state thresholds such as California's mandatory $70,304.00 per year ($1,352.00 per week in 2026).
2. The Duties Test: The employee's primary job duties must meet specific statutory criteria for Executive, Administrative, or Professional responsibilities. Performing routine administrative tasks, manual labor, or clerical work does not satisfy the duties test, regardless of salary level.

If a salaried employee does not satisfy both tests, they are legally classified as salaried non-exempt. For non-exempt salaried staff, employers must calculate a regular hourly rate by dividing weekly salary by intended hours (standardly 40 hours) and pay 1.5× that rate for any hours worked beyond 40. Learn more in our full legal guide on overtime for salaried employees or run your numbers through our salaried overtime calculator.