No Tax on OvertimeCalculator
See exactly how much more you take home when overtime pay is federal income tax exempt.
No Tax on Overtime Calculator
See your exact take-home increase
Real-World Savings Examples
Calculate in 4 Simple Steps
Enter Your Hourly Rate
Input your regular (non-overtime) hourly rate. Your overtime rate is automatically calculated at 1.5× this amount, as required by the Fair Labor Standards Act.
Enter Your Overtime Hours
Enter how many overtime hours you typically work per week and how many weeks per year you work overtime. If overtime is inconsistent, use your honest weekly average.
Select Your Filing Status and Income
Your federal marginal tax rate — the rate that applies to overtime income — depends on your total income and filing status. Enter your regular annual income before any overtime.
See Your Annual Savings
The calculator shows exactly how much federal income tax you save annually when overtime pay is excluded from taxable income, plus how much extra lands in each biweekly paycheck.
Overtime Tax Exemption — Common Questions
How We Calculate
This calculator computes the federal income tax savings generated by exempting overtime pay from taxable income. Overtime pay is calculated per the Fair Labor Standards Act (FLSA), which mandates a minimum of 1.5× the regular hourly rate for all hours worked beyond 40 in a workweek.
Federal income tax savings are computed using 2026 marginal tax brackets (projected from IRS Revenue Procedure 2025-28 inflation adjustments). Because overtime income is earned on top of regular wages, it is taxed at your marginal rate — the highest bracket your income reaches. This calculator identifies that marginal rate based on your regular income and filing status, then multiplies it by your total annual overtime income to determine the precise tax amount currently withheld from overtime pay. Under a federal overtime tax exemption, that entire amount would remain in your paycheck.
Note: State income tax treatment of overtime varies by state and is not included in this calculator. Consult a tax professional for a complete picture of your total tax savings, including applicable state exemptions.
Sources & References
- Fair Labor Standards Act (FLSA) — 29 U.S.C. § 207 Overtime compensation
- IRS Revenue Procedure 2025-28 — 2026 Tax Year Inflation Adjustments
- IRS Publication 15-T — Federal Income Tax Withholding Methods (2026)
- U.S. Department of Labor — Overtime Pay (dol.gov/agencies/whd/overtime)
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ToolSite Team
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