How It Works

Overtime pay compensates you for working beyond your regular hours, typically at 1.5 times your normal rate (time and a half). This calculator shows you the gross overtime earnings plus the actual net amount you take home after taxes.

The basic math multiplies your overtime hours by your overtime rate. But the critical question is how much you actually keep after federal tax, state tax, Social Security, and Medicare get deducted. That’s what this tool reveals.

Understanding Overtime Pay

What Counts as Overtime

Federal law (FLSA) requires overtime pay at 1.5x regular rate for non-exempt employees who work over 40 hours in a workweek. Some states have daily overtime rules (California pays overtime after 8 hours in a day). Salaried employees classified as exempt don’t get overtime at all.

Time and a Half vs Double Time

Time and a half (1.5x) is standard federal overtime. Double time (2x) applies in some states for excessive hours (over 12 in a day in California) or for holidays. Some employers offer double time voluntarily for weekends or nights, but it’s not federally required.

How Overtime Affects Taxes

Overtime income is taxed as regular wages, which means it gets added to your total income and taxed at your marginal rate. If you’re in the 22% federal bracket, roughly 22% of overtime goes to federal tax, plus state, FICA, and potentially local taxes. This is why gross overtime looks impressive but net overtime feels smaller.

The Overtime Decision

When Overtime Makes Sense

Overtime is smart when you need the money for specific goals (debt payoff, emergency fund, major purchase), when it’s temporary (seasonal work, project deadline), when the net rate is high enough to justify sacrificing personal time, or when refusing overtime risks your job security.

When to Skip Overtime

Decline overtime if it’s destroying your health, relationships, or mental wellbeing. Skip it if the net hourly rate is too low to justify the time cost. Avoid it if you’re burning out and performance is suffering. Turn it down if you have better earning opportunities elsewhere (freelance side work, skill building).

The Real Cost of Overtime

Beyond taxes, overtime costs you time, energy, and opportunity. Working 60 hours weekly means no time for side hustles, education, or rest. Calculate opportunity cost: could those 10 overtime hours generate more value spent learning new skills, starting a business, or improving your health?

Common Mistakes People Make

The biggest mistake is thinking overtime is free money. It’s not free. You trade time and energy. Factor in exhaustion, missed family time, health impacts, and career development opportunities you’re sacrificing.

Another error is assuming all overtime pays the same. Some employers pay 1.5x only after 40 hours. Others pay it after 8 hours daily. Some pay double time on Sundays or holidays. Know your actual rate structure.

People also forget that overtime can push you into a higher tax bracket or trigger additional Medicare tax (0.9% extra over $200k income). Calculate total tax impact, not just regular rates.

Table of Truth: Overtime Pay Examples

Hourly Rate	OT Rate (1.5x)	10 OT Hours Gross	Net (after 35% tax)
$15/hr	$22.50/hr	$225	$146
$20/hr	$30/hr	$300	$195
$25/hr	$37.50/hr	$375	$244
$30/hr	$45/hr	$450	$293

These estimates assume 35% total tax burden (federal, state, FICA). Your actual take-home depends on your specific tax situation and location.

Real-World Scenarios

What if I’m salaried?

Salaried employees classified as exempt under FLSA don’t get overtime pay regardless of hours worked. If you’re non-exempt salaried, you still qualify for overtime. Check your classification. Many workers are misclassified as exempt when they should be getting overtime.

What if overtime is mandatory?

Employers can require overtime (except where state laws restrict it). You can’t refuse without risking termination unless you have a contract or union agreement limiting mandatory overtime. Calculate the net value and decide if the job is worth it long-term.

What if I work multiple jobs?

Overtime rules apply per employer, not total hours across all jobs. Working 40 hours at job A and 20 at job B doesn’t trigger overtime at either employer. But both incomes combine for tax purposes, potentially pushing you into higher brackets.

What if my employer offers comp time instead?

Comp time (paid time off instead of cash) is generally illegal for private sector employers under FLSA. Public sector workers can receive comp time under specific rules. Private employers must pay cash for overtime, not trade time off.

What if I’m misclassified as a contractor?

True independent contractors don’t get overtime. But many workers are misclassified as contractors when they’re really employees. If your employer controls your schedule, provides tools, and directs your work, you might be an employee entitled to overtime. Consult a labor attorney if unsure.

What if my state has different overtime laws?

California requires overtime after 8 hours daily and double time after 12 hours daily or 8 hours on the seventh consecutive workday. Alaska requires overtime after 8 hours daily. New York has industry-specific rules. Always check your state’s labor laws, they often provide better protection than federal minimums.

Smart Overtime Strategy

Track Your Effective Rate

Calculate net overtime per hour after taxes. If you make $25/hour regular and $37.50 overtime, but only net $24 after taxes, you’re earning less per hour than your base rate on a take-home basis. Know this number when deciding whether to work extra.

Set Overtime Limits

Decide maximum sustainable overtime hours weekly. Most people can’t sustain more than 50-55 hours weekly without performance and health decline. Set a cap (example: no more than 10 overtime hours weekly) and stick to it unless there’s an emergency.

Use Overtime Strategically

Work overtime during specific goal periods (saving for house down payment, paying off debt, building emergency fund), then scale back to regular hours. Don’t make overtime your permanent lifestyle. It’s a temporary tool, not a sustainable strategy.

Negotiate Better Base Pay

If you’re working consistent overtime to make ends meet, your base pay is too low. Negotiate a raise, find a better-paying job, or add skills that qualify you for higher wages. Relying on overtime means you’re underpaid at your base rate.

Legal Rights and Protections

Overtime Pay Is Not Optional

If you’re non-exempt and work over 40 hours, your employer must pay overtime. Period. Calling someone salaried doesn’t make them exempt. Job title doesn’t matter. Actual job duties determine exemption status. Many employers illegally deny overtime to workers who qualify.

Common Illegal Practices

Employers cannot average hours across pay periods to avoid overtime (working 50 one week and 30 the next is still 10 hours of overtime in week one). They can’t offer comp time instead of cash in private sector. They can’t make you work off the clock. They can’t misclassify you as exempt to avoid paying overtime.

What To Do If Denied Overtime

Document all hours worked, including start times, end times, and breaks. Keep records for at least three years. File a complaint with your state labor department or federal Department of Labor. Consider consulting an employment attorney. Overtime violations often include back pay plus penalties.

Frequently Asked Questions

How is overtime calculated?

Overtime is your regular hourly rate multiplied by the overtime multiplier (usually 1.5) for each hour over 40 in a workweek. If you make $20/hour, overtime is $30/hour. Work 45 hours and you get 40 hours at $20 plus 5 hours at $30.

Do I pay more taxes on overtime?

Overtime is taxed as regular income. It doesn’t trigger special tax rates, but earning more total income might push you into a higher tax bracket. The extra earnings are taxed at your marginal rate, which could be higher than your effective rate on base pay.

Can my employer force me to work overtime?

Generally yes, unless you have a contract or union agreement limiting it. Federal law doesn’t restrict mandatory overtime hours (some states do). But employers must pay the overtime rate. Refusing can be grounds for termination in at-will employment states.

What if I’m salaried but still work overtime?

Depends on your exemption status. Exempt employees (meeting salary and duties tests) don’t get overtime regardless of hours. Non-exempt salaried employees do get overtime. Being salaried doesn’t automatically mean exempt. Check your classification.

Does overtime count toward my 401k?

Yes, overtime wages count as compensation for 401k contribution purposes. If you contribute 5% of pay, that includes overtime. Employer match formulas vary, check your plan. Some limit match to base salary only.

Is working 60 hours a week sustainable?

Not for most people long-term. Research shows productivity drops significantly after 50 hours weekly. Health impacts increase. Burnout risk rises. If you’re consistently working 60+ hours, either your base pay is insufficient or your employer is understaffed. Neither is sustainable.

Should I always accept overtime offers?

No. Consider net pay after taxes, personal time value, health impacts, and alternative earning opportunities. Sometimes declining overtime to rest, spend time with family, or work on skill development has higher long-term value than the immediate cash.

Overtime Across Industries

Manufacturing workers often see predictable overtime during busy seasons. A machinist making $28/hour earns $42 overtime, but after 35% total tax only nets about $27.30 per overtime hour. The gross looks great, the net is barely above base rate.

Healthcare workers (nurses, techs) frequently work mandatory overtime due to understaffing. At $32/hour base with $48 overtime, they might net $31 per overtime hour after taxes. The real cost is exhaustion affecting patient care and personal health.

Retail and food service workers earning $15/hour get $22.50 overtime but only net about $14.60 after taxes. At those rates, overtime barely moves the needle financially but significantly impacts quality of life and scheduling flexibility.

Making the Right Decision

Calculate your net overtime rate using this tool. Compare it to your regular net hourly rate. Then ask: is this small increase worth the time, energy, and opportunity cost?

Consider the full picture. Health impacts, family time, career development, and mental wellbeing all have value. Sometimes the financially optimal decision is refusing overtime to invest in yourself instead.

Use overtime strategically for short-term goals, not as a permanent income strategy. If you need overtime to afford your lifestyle, you have an income problem that overtime won’t solve long-term. Either increase base pay or decrease expenses.

Most importantly, know your rights. If you’re entitled to overtime, demand it. If your employer violates overtime laws, report it. Your time has value, and the law protects that value.