How Overtime Pay Works
The Basics: FLSA and the 40-Hour Standard
Under the Fair Labor Standards Act (FLSA), non-exempt employees in the U.S. earn overtime for any hours past 40 in a workweek. The standard rate is 1.5 times your normal hourly pay — what most people call "time and a half."
How Overtime Pay Is Calculated
The math is simple: take your hourly rate, multiply by the overtime multiplier (usually 1.5x), and multiply by overtime hours. If you make $25/hr and work 50 hours in a week, those 10 extra hours pay $37.50/hr. That's $1,000 in regular pay plus $375 in overtime — $1,375 gross for the week.
Different Thresholds and Multipliers
40 hours is the federal line, but some states and employers draw it earlier. California triggers overtime after 8 hours in a single day, and certain union contracts kick in at 35 or 37.5 hours. Double-time (2x) is less common but does come up — California mandates it after 12 hours in a day, and some employers offer it on holidays.
Overtime and Your Taxes
Overtime is taxed the same as regular income — there's no special "overtime tax rate." That said, the extra earnings can push part of your income into a higher marginal bracket. Your effective rate might tick up a bit during heavy overtime weeks, but only the dollars above the bracket threshold get taxed at the higher rate, not your entire paycheck.
The One Big Beautiful Bill Act and Overtime
The One Big Beautiful Bill Act (P.L. 119-21), signed in 2025, lets eligible workers skip federal income tax on overtime. Section 70202 gives FLSA-covered hourly employees a deduction for qualifying overtime — capped at $12,500/year for single filers or $25,000 for joint filers. It only covers tax years 2025 through 2028, and Social Security and Medicare taxes still apply. Use our overtime tax savings calculator to estimate your savings.
Who Qualifies for Overtime?
Not everyone gets overtime. Salaried workers classified as "exempt" — think executive, administrative, or professional roles — generally don't qualify. The Department of Labor sets a salary floor for these exemptions. If you're non-exempt or paid hourly, you're almost certainly owed overtime once you pass the weekly threshold.