How is overtime pay calculated in 2026?

Under the federal Fair Labor Standards Act (FLSA), non-exempt employees must receive overtime pay at a rate of at least 1.5 times their regular rate of pay for all hours worked over 40 in a workweek. The formula is: Overtime Pay = (Regular Rate × 1.5) × Overtime Hours. For example, an employee earning $20/hour who works 48 hours in a week receives: Regular pay = $20 × 40 = $800; Overtime pay = ($20 × 1.5) × 8 = $30 × 8 = $240; Total weekly pay = $1,040. The regular rate must include all remuneration for employment (including nondiscretionary bonuses, shift differentials, and commissions) divided by total hours worked — not just the base hourly rate.

What is the new OBBBA No Tax on Overtime deduction for 2026?

The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, created a new federal income tax deduction for 'qualified overtime compensation' for tax years 2025–2028. Qualified overtime is ONLY the premium portion of FLSA-required overtime — the 'half' portion of time-and-a-half (0.5 × regular rate × overtime hours), NOT the full overtime wage. The maximum deduction is $12,500 for Single and Head of Household filers, and $25,000 for Married Filing Jointly. The deduction phases out for MAGI above $150,000 (Single) or $300,000 (MFJ). It is available to both itemizers and non-itemizers. Starting with tax year 2026, qualified overtime is separately reported by employers on Form W-2, Box 12, Code TT.

Who is exempt from overtime pay under the FLSA in 2026?

Under the FLSA, employees are exempt from overtime if they pass all three tests: (1) Salary Basis Test — paid a fixed predetermined salary not reduced based on hours; (2) Salary Level Test — earn at least $684 per week ($35,568 per year) in 2026, the same threshold as 2025 after courts blocked the 2024 DOL increase; and (3) Duties Test — primarily perform executive, administrative, or professional duties. All three tests must be met. Paying a salary alone does not create an exemption — a salaried employee earning below $684/week is automatically non-exempt and entitled to overtime. Several states set higher thresholds: California ($1,352/week), Colorado ($1,111.23/week), New York ($1,275/week in NYC/Long Island/Westchester, $1,199.10/week elsewhere), Washington ($1,541.70/week).

What states require daily overtime in addition to weekly overtime?

Several states require overtime for hours over 8 in a single day — known as daily overtime — in addition to the federal weekly threshold of 40 hours. California requires: 1.5x pay for hours over 8 in a day (up to 12), 2.0x pay for hours over 12 in a day, and 1.5x pay for the first 8 hours on the 7th consecutive day of a workweek (2.0x thereafter). Alaska requires daily overtime (1.5x) for hours over 8 in a day. Nevada requires daily overtime (1.5x) for hours over 8 in a day if the employee earns less than 1.5 times the Nevada minimum wage. Other states with some form of daily overtime rules include Colorado (under certain circumstances for minor employees) and several with specific industry rules.

Free Overtime Pay Calculator 2026 – FLSA Time and a Half Calculator

FREE OVERTIME PAY CALCULATOR 2026

Q: How is overtime calculated for salaried non-exempt employees?

For salaried non-exempt employees — those paid a fixed salary but not exempt from overtime — the regular rate is calculated by dividing the weekly salary by the number of hours the salary was intended to cover. Under the fluctuating workweek (FWW) method, a fixed salary covers all hours worked, making the regular rate equal to the salary divided by actual hours worked. The overtime premium is then 0.5 times the regular rate (since the regular rate already covers all hours including overtime). Under the fixed workweek method, the regular rate is the salary divided by the agreed fixed hours (e.g., 40), and overtime is paid at 1.5 times that rate for hours over 40.

Calculate your overtime pay using current 2026 FLSA rules. This calculator handles standard hourly overtime, salaried non-exempt employees, blended regular rate calculations (when bonuses are included), and the OBBBA “No Tax on Overtime” deduction estimator — the new federal deduction of up to $12,500 (Single) / $25,000 (MFJ) on your overtime tax premium. Choose your calculator mode below.

OVERTIME PAY CALCULATOR 2026

FLSA time-and-a-half · Salaried non-exempt · Blended rate · OBBBA No Tax on Overtime deduction

Hourly Worker OT

Salaried Non-Exempt

Blended Rate

OBBBA Tax Deduction

Regular Hourly Rate ($)

Overtime Multiplier

Regular Hours This Week FLSA: OT required for hours over 40 per week.

Overtime Hours This Week Hours worked beyond the regular threshold.

Weeks Per Year (for annual projection) Filing Status (for OBBBA deduction preview)

Salaried Non-Exempt: A salaried employee earning below $684/week ($35,568/yr) is automatically non-exempt and entitled to overtime pay regardless of job title or duties. This calculator applies the two common calculation methods.

Weekly Salary ($)

Hours Actually Worked This Week

Calculation Method Fixed method: most common; salary = 40 hrs assumed. FWW: must have explicit agreement; regular rate varies week to week. Overtime Multiplier

Blended Regular Rate: Under FLSA, the “regular rate” for overtime purposes must include all remuneration — base wages, nondiscretionary bonuses, shift differentials, and commissions. If you received a bonus this week, your overtime rate may be higher than just 1.5× your base rate.

Hourly Base Rate ($)

Total Hours Worked This Week

Nondiscretionary Bonus / Shift Differential This Week ($) Include production bonuses, attendance bonuses, shift differentials, and commissions. Exclude discretionary bonuses and gifts — those do not affect the regular rate. Overtime Threshold (hours/week)

        OBBBA “No Tax on Overtime” — 2026: Only the premium portion of FLSA overtime qualifies — the “half” of time-and-a-half (0.5 × regular rate × OT hours). NOT the full OT wage. Starting 2026, reported on W-2 Box 12, Code TT. Available 2025–2028.
      

Regular Hourly Rate ($)

Overtime Hours Per Week

Weeks of Overtime Per Year

Filing Status

Your Modified Adjusted Gross Income (MAGI) — Annual MAGI is generally your total annual gross income. Phase-out begins at $150,000 (Single) / $300,000 (MFJ). Below these amounts, you receive the full deduction up to the cap.

2026 FLSA Overtime Quick Facts: Time-and-a-half (1.5×) for hours over 40 in a workweek. Exempt salary threshold: $684/week ($35,568/yr). Federal minimum wage: $7.25/hr. Regular rate must include nondiscretionary bonuses and commissions. OBBBA “No Tax on Overtime” deduction: up to $12,500 (Single) / $25,000 (MFJ) on the premium portion only — available 2025–2028. Starting 2026, reported on W-2 Box 12, Code TT.

    OBBBA “No Tax on Overtime” — What Qualifies and What Doesn’t:

    The deduction covers only the premium portion of FLSA-required overtime — the “half” of time-and-a-half. Example: $20/hr rate, 8 OT hours. Full OT wage = $30/hr × 8 = $240. Qualified OT premium = ($20 × 0.5) × 8 = $80 only — NOT $240. The remaining $160 (the regular rate portion) is still fully taxable. Only FLSA overtime qualifies — state-law daily overtime (California, Alaska) or voluntary employer overtime beyond FLSA requirements generally does not qualify per IRS FAQ Q1/A1. Starting 2026, the qualified amount is separately reported on Form W-2 Box 12, Code TT.

HOW OVERTIME PAY IS CALCULATED — THE FLSA FORMULA

The federal FLSA requires non-exempt employees receive overtime at not less than 1.5 times their regular rate for all hours over 40 in a workweek. Here is the complete calculation sequence:

Example — $20/hr hourly worker, 48 hours worked, 1.5× OT, 52 weeks:
Regular rate = $20.00/hr
OT rate (1.5×) = $20 × 1.5 = $30.00/hr
Regular pay = $20 × 40 hrs = $800.00
Overtime pay = $30 × 8 hrs = $240.00
Total weekly pay = $1,040.00
Annual (52 wks) = $54,080.00

OBBBA qualified OT premium = $20 × 0.5 × 8 hrs × 52 wks = $4,160 (well under $12,500 cap)
Est. federal tax saved on OT deduction (22% bracket) = $4,160 × 22% = ~$915/year

OVERTIME RATE QUICK REFERENCE TABLE

Regular Rate	1.5× OT Rate	2.0× Double Time	OT Premium (0.5×)	OBBBA Deduct / OT Hr
$10.00/hr	$15.00/hr	$20.00/hr	$5.00/hr	$5.00/hr
$12.00/hr	$18.00/hr	$24.00/hr	$6.00/hr	$6.00/hr
$15.00/hr	$22.50/hr	$30.00/hr	$7.50/hr	$7.50/hr
$20.00/hr	$30.00/hr	$40.00/hr	$10.00/hr	$10.00/hr
$25.00/hr	$37.50/hr	$50.00/hr	$12.50/hr	$12.50/hr
$30.00/hr	$45.00/hr	$60.00/hr	$15.00/hr	$15.00/hr
$35.00/hr	$52.50/hr	$70.00/hr	$17.50/hr	$17.50/hr
$40.00/hr	$60.00/hr	$80.00/hr	$20.00/hr	$20.00/hr
$50.00/hr	$75.00/hr	$100.00/hr	$25.00/hr	$25.00/hr

OBBBA deduction per OT hour = 0.5 × regular rate. This is the qualified premium eligible for deduction — not the full OT wage. Applies 2025–2028, capped at $12,500 (Single) / $25,000 (MFJ), phases out above $150k/$300k MAGI.

FLSA OVERTIME EXEMPTION THRESHOLDS — 2026

Jurisdiction	Exempt Salary Threshold (2026)	Weekly	Notes
Federal (FLSA)	$35,568/year	$684/week	2024 DOL increase ($1,128/wk) blocked by courts; reverted to $684/wk
California	$70,304/year	$1,352/week	= 2× CA minimum wage ($16.90/hr) × 40 hrs × 52 wks ÷ 52; effective Jan 1, 2026
Colorado	$57,783/year	$1,111.23/week	COMPS Order; effective Jan 1, 2026
New York (NYC, Nassau, Suffolk, Westchester)	$66,300/year	$1,275/week	Effective Jan 1, 2026
New York (rest of state)	$62,353/year	$1,199.10/week	Effective Jan 1, 2026
Washington State	$80,168/year	$1,541.70/week	= 2.25× WA minimum wage; effective Jan 1, 2026
Maine	$45,396/year	$872.77/week (est.)	Tied to state minimum wage; verify with Maine DOL

Three Tests — All Must Be Met for Overtime Exemption: A salaried employee is NOT automatically exempt from overtime. All three tests must pass: (1) Salary Basis Test — paid a predetermined fixed salary that isn’t reduced based on hours or quality of work; (2) Salary Level Test — earns at least $684/week federally (higher in CA, CO, NY, WA); and (3) Duties Test — job primarily involves executive, administrative, or professional duties as defined by FLSA regulations. Failing even one test means the employee is non-exempt and entitled to overtime. Giving an employee a “manager” title or putting them on salary does not create an exemption if they don’t pass the duties test.

STATE DAILY OVERTIME RULES

State	Daily OT Rule	Double Time Rule	7th Consecutive Day Rule
California	1.5× for hours over 8/day	2.0× for hours over 12/day	1.5× first 8 hrs; 2.0× thereafter
Alaska	1.5× for hours over 8/day AND over 40/week	None required by state	None required
Nevada	1.5× for hours over 8/day if employee earns less than 1.5× NV minimum wage	None required by state	None required
All other states	None (only federal 40-hr/week threshold)	None (unless employer contract)	None required

BLENDED REGULAR RATE — WHEN BONUSES CHANGE YOUR OT RATE

Many workers don’t realize that nondiscretionary bonuses, production bonuses, attendance bonuses, and shift differentials must be included in the “regular rate” used for overtime calculations. Only discretionary bonuses (year-end gifts, sporadic bonuses at employer’s sole discretion) can be excluded.

Example — $18/hr worker, 48 hours, $200 production bonus this week:
Base wages: $18 × 48 hrs = $864.00
Production bonus: $200.00
Total remuneration: $864 + $200 = $1,064.00
Blended regular rate: $1,064 ÷ 48 hrs = $22.17/hr
OT premium (0.5× blended rate): $22.17 × 0.5 × 8 hrs = $88.67
Total weekly pay: $1,064 + $88.67 = $1,152.67

Without bonus included: OT extra = $18 × 0.5 × 8 = $72 → would be underpaying by $16.67/wk

OBBBA “NO TAX ON OVERTIME” — FULL DETAILS

Item	Detail
Law	One Big Beautiful Bill Act (OBBBA), P.L. 119-21, signed July 4, 2025
Tax years covered	2025, 2026, 2027, 2028 (expires after 2028 unless extended)
What qualifies	Only the premium portion of FLSA-required overtime — the 0.5× extra pay above the regular rate. NOT the full OT wage amount.
What does NOT qualify	State-law daily overtime (CA, AK, NV daily OT above FLSA requirements), contractual overtime beyond FLSA minimum, discretionary OT bonuses
Maximum deduction — Single / HOH	$12,500 per year
Maximum deduction — Married Filing Jointly	$25,000 per year
Phase-out begins — Single	MAGI above $150,000
Phase-out begins — Married Filing Jointly	MAGI above $300,000
Who is eligible	FLSA-covered non-exempt employees; W-2 workers; must have valid SSN
Married Filing Separately	Not eligible — MFS filers cannot claim the deduction
Effect on FICA	Does NOT reduce Social Security or Medicare taxes — OT is still fully subject to FICA
2026 reporting	Employers must separately report qualified OT on Form W-2, Box 12, Code TT starting with 2026 tax year
Available to	Both itemizers and non-itemizers — above-the-line deduction on Schedule 1-A

Fastest Way to Hit the $12,500 Deduction Cap: At $20/hr, you need 1,250 overtime hours of qualified premium (1,250 = $12,500 ÷ $10 premium per OT hour). That’s approximately 24 OT hours/week for 52 weeks. At $25/hr, you only need 1,000 OT premium hours ($12,500 ÷ $12.50) — about 19 OT hrs/week all year. Once you hit the cap, additional OT premium is not deductible. The MFJ $25,000 cap is twice as large, making it especially valuable for two-earner couples who both work overtime.

OVERTIME PAY CALCULATOR — FAQs

How is overtime calculated in 2026?
Under federal FLSA: Regular Rate × 1.5 × Overtime Hours for all hours over 40 in a workweek. The regular rate must include all nondiscretionary remuneration (base wages + production bonuses + shift differentials + commissions), divided by total hours worked. Discretionary bonuses and expense reimbursements are excluded from the regular rate.

What is the OBBBA No Tax on Overtime deduction?
Created by the One Big Beautiful Bill Act (July 2025), the deduction applies only to the premium portion of FLSA overtime — the “half” of time-and-a-half. At $20/hr working 8 OT hours, the deductible premium is $20 × 0.5 × 8 = $80 per week, not $240. Maximum deduction: $12,500 (Single/HOH) / $25,000 (MFJ). Available 2025–2028. Phases out above $150k/$300k MAGI. Does not reduce FICA taxes.

Who is exempt from overtime in 2026?
Employees must pass all three FLSA tests: salary basis, salary level ($684/week federally), and duties test (executive, administrative, professional). Several states set higher thresholds — California $1,352/week, Colorado $1,111/week, Washington $1,542/week, New York (NYC) $1,275/week. Below the applicable threshold, the employee is automatically non-exempt regardless of job title or duties.

How is overtime calculated for salaried non-exempt employees?
Under the Fixed Workweek method: Regular rate = weekly salary ÷ 40; OT paid at 1.5× regular rate for hours over 40. Under the Fluctuating Workweek (FWW) method: Regular rate = weekly salary ÷ actual hours worked that week (varies weekly); OT premium is 0.5× the varying regular rate (since the regular rate already compensates all hours). FWW requires a clear mutual agreement that the salary covers all hours.

Do I owe FICA taxes on overtime pay?
Yes. FICA (Social Security 6.2% and Medicare 1.45%) applies to all wages including overtime pay. The OBBBA deduction reduces federal income tax only — it does not exempt overtime from Social Security or Medicare. The maximum Social Security tax for 2026 is $10,918.20 (6.2% of the $176,100 wage base).