How overtime is paid
Under the US Fair Labor Standards Act, non-exempt employees must be paid at least one and a half times their regular rate for hours over 40 in a workweek. Some states, such as California, also require daily overtime and double time in certain cases, and some employers pay double time on holidays by policy. Salaried exempt employees generally do not get overtime.
At $24 an hour, eight hours of time-and-a-half adds $288 to a $960 regular week.
Overtime and the 2025 tax deduction
A federal law passed in 2025 created a temporary deduction for qualified overtime pay, available for tax years 2025 through 2028. It covers the extra half in time and a half, not the whole overtime paycheck, up to $12,500 a year for single filers or $25,000 for joint filers, and it phases out for higher incomes starting around $150,000 of modified adjusted gross income for single filers. It lowers federal income tax only; Social Security, Medicare and most state taxes still apply.
For a worker earning $24 an hour who works 8 overtime hours every week, the premium part is $12 an hour, or about $4,990 over a year, which could be deductible. Because the rules are new and depend on how your employer reports overtime, check the latest IRS guidance or ask a tax professional before counting on it. The take-home pay calculator shows your regular pay after tax.
Common questions
Is overtime tax-free in 2026?
Not entirely. A temporary federal deduction for 2025 to 2028 can exempt the premium half of time-and-a-half pay from federal income tax, up to a yearly limit, but Social Security, Medicare and usually state tax still apply.
What is time and a half for $20 an hour?
$30 an hour.
Is overtime taxed more?
No, it is taxed as ordinary income, though a larger paycheck can mean more withholding that week. Check current rules, as some US tax changes affect overtime deductions.
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