How-to · 2026 brackets · Estimates only · Updated October 2, 2026
How is overtime taxed?
Direct answer
Overtime is taxed like any other wage: your federal bracket, plus 7.65% FICA (6.2% Social Security and 1.45% Medicare), plus state tax if any. It is not a higher overtime rate. On $1,000 in the 22% bracket you pay about $220.00 federal + $76.50 FICA before the 2025–2028 premium deduction.
Tax on $1,000 of time-and-a-half overtime
| Bracket | Federal, no deduction | Federal after premium deduction | You keep (with deduction, plus FICA) |
|---|---|---|---|
| 10% | $100.00 | $66.67 | $856.83 |
| 12% | $120.00 | $80.00 | $843.50 |
| 22% | $220.00 | $146.67 | $776.83 |
| 24% | $240.00 | $160.00 | $763.50 |
| 32% | $320.00 | $213.33 | $710.17 |
FICA on $1,000 is $76.50 in every row, and it is not reduced by the deduction. No state tax. One-third of time-and-a-half pay is the deductible FLSA premium.
Worked paycheck: $25/hour, 10 overtime hours
Weekly, single filer, 2026, no state tax, 40 regular hours. Overtime pay is $375.00. About $83.30 is withheld from that overtime, so you keep $291.70 (77.8%) on that check. Over 26 such weeks, tax on $9,750 of overtime is about $1,526 (15.7%) after the deduction. Withholding on one fat week can still look higher than that annual rate.
Why the check looks overtaxed
- Payroll annualizes the check. One heavy week is taxed as if every week looked like that.
- A separate overtime payment can be withheld at a flat 22% federal rate.
- The no-tax-on-overtime deduction is claimed on the return. Paycheck withholding ignores it unless you update Form W-4.
- Extra withholding usually comes back as a refund if your real annual income is lower.
Limits
- These figures use 2026 federal brackets and a standard deduction, with no other income or credits.
- Social Security stops at the annual wage base. Additional Medicare (0.9%) starts above $200,000 of wages.
- This is an estimate, not tax advice.
Use the calculator
The deductible half: how much overtime is tax free? Enter your rate and hours in the overtime tax calculator.