Overtime Tax Calculator (2026)
Is overtime taxed more? Enter your rate and overtime hours to see your gross overtime pay, estimated federal withholding at your marginal bracket plus FICA, and what you actually keep.
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The overtime tax myth
Ask any break room and someone will tell you overtime "isn't worth it because the government takes most of it." The kernel of truth: a paycheck stuffed with overtime often shows a brutal withholding number. The myth: that overtime is taxed at a special higher rate. It isn't. Under the Internal Revenue Code, overtime wages are ordinary wage income, taxed at your regular marginal rate — the bracket your last dollar of income falls in. A $375 overtime payout to someone in the 22% bracket faces the same 22% federal treatment as $375 of straight-time pay.
So why does the pay stub look so cruel? Two mechanics. First, FICA takes its 7.65% off the top of every wage dollar (Social Security 6.2% + Medicare 1.45%, 2026 rates), overtime included. Second, withholding math: payroll software frequently uses the aggregate method, annualizing one fat paycheck as though you earned that much every single week — which can shove that period's withholding calculation into a higher bracket. That extra withholding isn't extra tax. It's an interest-free loan to the Treasury that comes back at filing time.
How the math works
Gross overtime pay = overtime hours × hourly rate × 1.5 Estimated federal withholding = gross overtime × your marginal bracket FICA = gross overtime × 7.65% You keep = gross overtime − federal withholding − FICA
Pick the bracket that matches your marginal rate (not your effective rate — the rate on your last dollar). The calculator applies FICA's full 7.65% and assumes you're under the 2026 Social Security wage base of $184,500. State tax is excluded because it varies too much to estimate responsibly.
Worked example
A warehouse associate earning $25/hour works 10 overtime hours and sits in the 22% federal bracket:
| Step | Calculation | Result |
|---|---|---|
| Gross overtime pay | 10 × $25.00 × 1.5 | $375.00 |
| Federal withholding (est.) | $375.00 × 22% | $82.50 |
| FICA (est.) | $375.00 × 7.65% | $28.69 |
| Total withheld (est.) | $82.50 + $28.69 | $111.19 |
| You keep | $375.00 − $111.19 | $263.81 |
Effective bite: 29.65% of the overtime dollar. Meaningful — but she still banks $263.81 she wouldn't have had, at an after-tax hourly value of $26.38, well above her $25 straight-time rate. That's the number that matters when deciding whether overtime is "worth it."
Withholding vs. actual tax — don't confuse them
This distinction is worth internalizing because it drives real decisions. Withholding is your employer's per-paycheck estimate, governed by IRS Publication 15-T tables and methods. Actual tax is computed once a year on your Form 1040 from total income. When the two disagree — and with lumpy overtime they often do — the difference settles at filing: over-withheld becomes a refund, under-withheld becomes a balance due. The calculator above estimates the withholding-style bite on the overtime amount, which is the number you'll actually see missing from that paycheck.
One more nuance for high earners: the Social Security wage base ($184,500 for 2026). Earn past it and the 6.2% Social Security slice drops off your remaining wages for the year — late-year overtime can paradoxically be "cheaper," tax-wise, than early-year overtime. Medicare's 1.45% (plus the 0.9% Additional Medicare Tax over $200,000 single / $250,000 joint) has no cap. This calculator keeps it simple and assumes you're under the base.
Data sources: IRS 2026 federal income tax brackets and withholding methods (Publication 15-T); Social Security Administration — 2026 taxable maximum $184,500; FICA rates 2026. State tax excluded. Estimates only, not tax advice — "estimates only, not tax advice."
Frequently asked questions
Is overtime pay taxed at a higher rate?
No. Overtime wages are ordinary income taxed at your normal marginal rate — the same bracket as the rest of your pay. The confusion comes from withholding: payroll systems often withhold a bigger slice from a large overtime paycheck, but your actual tax liability is computed on total annual income, and any over-withholding comes back as a refund.
What does this calculator assume?
You pick your federal marginal bracket (10%, 12%, 22%, or 24% — the 2026 single-filer brackets most hourly workers fall in), and the calculator applies it plus FICA (Social Security 6.2% + Medicare 1.45% = 7.65%) to your gross overtime pay. It assumes you're under the 2026 Social Security wage base ($184,500) and does not include state income tax, which varies by state.
Why did my paycheck show way more tax withheld on overtime week?
Many employers use the aggregate withholding method: the payroll software annualizes that one big paycheck as if you earned that much every week, which can push the withholding calculation into a higher bracket for that pay period. It's a withholding timing effect, not extra tax — the over-withheld amount is credited when you file your return.
Does the Social Security wage base matter here?
It can. Social Security tax (6.2%) stops once your year-to-date wages pass the 2026 wage base of $184,500; Medicare (1.45%) has no cap. This calculator assumes you're under the cap, which is true for the vast majority of hourly workers. If you're a very high earner near the cap, treat the FICA figure as approximate.
Should I avoid overtime because of taxes?
Almost never for tax reasons alone. Even in the 24% bracket plus FICA, you keep roughly two-thirds of every overtime dollar — and overtime pays 1.5× your rate, so the after-tax hourly value of overtime still beats straight time. Run the numbers above before turning down hours.
Estimates only, not tax or financial advice. Figures reflect the 2026 tax year. Verify important decisions with the IRS or a qualified tax professional.