Overtime pay calculator
Most overtime calculators handle only a single, straightforward rate. This one handles a mixed-rate workweek the way the FLSA actually requires — and adds the 2026 tax deduction most people working overtime don't yet know applies to only half of what shows up on their paycheck as "overtime."
Blended regular rate
$22
Total pay this week
$1,020
Annual OT premium
$2,307
Est. deductible amount
$2,307
Blending $20/hr and $28/hr across 44 hours gives a weighted regular rate of $22/hr — not either individual rate. 4 hours of overtime earn a $44 premium this week, for $1,020 total pay. Repeated 52 weeks a year, that's $2,307 in qualified overtime premium — fully deductible under the 2025–2028 "No Tax on Overtime" rule at this MAGI.
See how your Weighted regular rate compares — anonymous, no account needed.
Who reaches for this
Wants the correct blended overtime rate, not a guess based on whichever rate was active during the extra hours.
Wants to check that mixed-rate weeks are being paid correctly before an audit or a formal wage complaint finds the error first.
Wants to know how much of a year of overtime actually qualifies for the new deduction before assuming the full paycheck total is deductible on their federal return.
Wants to see whether their current MAGI puts them past the $150,000/$300,000 threshold where the deduction starts shrinking.
Wants to understand exactly which hours of a state-required overtime paycheck actually generate a federal tax benefit and which don’t.
Wants a clear, checkable reference for the blended-rate formula and the current 2026 deduction rules to build into internal payroll documentation.
The formula, and why blended rate isn't an average
This is a federal requirement, not a payroll convenience: the FLSA defines the "regular rate" for overtime purposes as total compensation for the week divided by total hours worked, and that regular rate — not whichever rate happened to be in effect during the last few hours — is what the 1.5× overtime multiplier applies to.
Why the blended rate isn't a simple average of the two rates
A plain average of two rates ignores how many hours were actually worked at each one, and gets the answer wrong the moment the hours split unevenly.
The two answers aren't close by coincidence-proof margins — they diverge because the simple average silently assumes equal hours at each rate, when the actual split here is 30 hours against 18. The weighted method is the only one that correctly reflects that the employee spent more time at the lower rate than the higher one, and it's the version the FLSA actually requires.
The two methods only agree when hours split exactly evenly between rates: 24 hours at $18 and 24 hours at $26 gives a weighted rate of ($18×24 + $26×24) ÷ 48 = $22.00/hour — identical to the simple average of $22.00, because 24 and 24 are equal. That coincidence disappears the moment the split shifts even slightly, which is why relying on a simple average as a shortcut is risky: it happens to work at exactly one specific hours split and silently produces the wrong number at every other split, without any obvious signal that something's off.
A full worked example
A worker splits a workweek between two roles for the same employer: 30 hours as an admin at $18/hour, and 18 hours on a special project at $26/hour — 48 hours total, 8 of them overtime.
Total straight-time pay: (30 × $18) + (18 × $26) = $540 + $468 = $1,008. Weighted regular rate: $1,008 ÷ 48 = $21.00/hour. Overtime premium: $21.00 × 0.5 × 8 = $84.00. Total pay for the week: $1,008 + $84 = $1,092.
Of that $1,092, only the $84 overtime premium is the FLSA-required "extra half" that qualifies for the 2026 tax deduction — the $1,008 in straight-time pay, including the straight-time portion already built into the 8 overtime hours, is taxed as ordinary wages exactly like any other hour worked. If this exact pattern repeated all 52 weeks of the year, the annual qualified overtime premium would be $84 × 52 = $4,368 — well under the $12,500 single-filer cap, and fully deductible at any MAGI below the $150,000 phase-out threshold.
A second scenario shows the deduction cap binding directly, not the phase-out. A nurse splits a workweek between a standard floor rate of $45/hour (35 hours) and an acute-care rate of $65/hour (15 hours) — 50 hours total, 10 of them overtime. Straight-time pay: (35 × $45) + (15 × $65) = $1,575 + $975 = $2,550. Weighted rate: $2,550 ÷ 50 = $51/hour. Overtime premium: $51 × 0.5 × 10 = $255 for the week. If this pattern holds for 50 working weeks a year, the annual qualified overtime premium comes to $255 × 50 = $12,750 — already past the $12,500 single-filer cap even at a MAGI of $95,000, well under the phase-out threshold. The deductible amount here is capped at $12,500, not the full $12,750 actually earned — a $250 gap that has nothing to do with income level and everything to do with the volume of overtime worked.
The 2026 "No Tax on Overtime" deduction
The One Big Beautiful Bill Act (OBBBA) created a new federal income tax deduction under IRC §225, in effect for tax years 2025 through 2028, unless Congress extends it further. It lets eligible employees deduct their qualified overtime premium from federal taxable income — not their full overtime paycheck. Despite the political shorthand of "no tax on overtime," overtime wages remain fully taxable on the paycheck itself — the benefit arrives later, as a deduction claimed on the annual tax return, not as an immediate reduction in withholding unless the new W-4 adjustment described below is used.
Only the FLSA-required premium — the 0.5× portion above the regular rate. Voluntary richer overtime (like a company policy paying double time when the FLSA only requires time-and-a-half) doesn’t qualify beyond the required premium.
W-2 employees covered by the FLSA’s overtime requirement. Self-employed people and FLSA-exempt salaried employees have no qualified overtime.
$12,500 for single/head-of-household filers, $25,000 for married filing jointly, per year. Married filing separately does not qualify at all.
Mandatory starting with 2026 W-2s (issued January 2027): Form W-2 Box 12, Code TT reports the year’s cumulative qualified overtime premium. Box 1 wages are unchanged — Code TT is informational, not a subtraction from taxable wages on the W-2 itself.
Social Security, Medicare, and the Additional Medicare surtax still apply in full. Most state income taxes are unaffected unless a state separately adopts its own version.
The 2026 Form W-4 added a section for anticipated overtime, letting an employee reduce paycheck withholding during the year to reflect the deduction they expect to claim at filing rather than waiting for a single larger refund. This is worth approaching conservatively: overestimating expected overtime and under-withholding as a result can leave a filer owing money at tax time instead of the smooth reduction the adjustment is meant to provide. Estimating with a full year's worth of typical overtime, not a single strong month, is a safer starting point for this adjustment than projecting from an unusually busy pay period or an unusually slow one.
The phase-out, worked through
The deduction cap shrinks at higher income, reduced by $100 for every $1,000 of modified adjusted gross income (MAGI) above the threshold — $150,000 for single/head-of-household filers, $300,000 for married filing jointly.
Working the $200,000 example by hand: $200,000 − $150,000 = $50,000 in excess MAGI, which is 50 units of $1,000, times $100 per unit = a $5,000 reduction. $12,500 − $5,000 = a $7,500 reduced cap. If this filer's actual qualified overtime premium for the year was $8,000, the deductible amount is capped at the reduced $7,500, not the full $8,000 — the phase-out reduces the ceiling, and the smaller of the ceiling or the actual premium is what gets deducted. The same 10%-of-excess mechanics apply on the joint-filer side, just measured against the $300,000 threshold and the $25,000 cap.
State overtime rules the federal calculation doesn't cover
Both the FLSA blended-rate math and the federal tax deduction are built entirely around the 40-hour weekly threshold. Several states layer their own, more protective overtime rules on top — and those state-only hours behave differently for tax purposes than federal weekly overtime does.
California is the most commonly cited example. Under Labor Code §510, non-exempt employees earn 1.5× their regular rate for hours worked beyond 8 in a single day, and 2× beyond 12 hours in a day — thresholds that trigger regardless of the employee's total hours for the week. A worker who logs 10 hours on Monday and stays under 40 for the week overall still earns 2 hours of California daily overtime, something federal law alone would never require. A separate rule adds overtime on the 7th consecutive day worked in a single workweek: 1.5× for the first 8 hours that day, 2× beyond that.
The tax treatment is where this actually matters for the deduction: state-mandated overtime that isn't also required by the federal 40-hour rule does not generate qualifying premium for the 2026 deduction. A California worker who racks up substantial daily overtime while staying under 40 hours for the week gets the state-required extra pay, but none of it counts toward the federal deduction — only the portion of a week's overtime that would independently qualify under the federal 40-hour threshold does. A worker whose hours exceed both thresholds in the same week gets federal-deduction treatment only for the hours attributable to crossing 40 for the week, not the full state-calculated overtime total.
A concrete comparison makes the distinction clear. A California worker logs 10 hours Monday, 8 hours each Tuesday through Thursday, and 6 hours Friday — 40 hours for the week. Monday alone triggers 2 hours of California daily overtime (the hours past 8), but the weekly total never crosses 40, so zero hours qualify for the federal deduction even though the worker was legally owed daily overtime pay. Change Friday to 10 hours instead of 6, and the week totals 44 hours: the worker now has 6 hours of California daily overtime across the week, but only 4 of those hours also cross the federal 40-hour threshold — it's those 4 hours, not all 6, whose premium qualifies for the federal deduction. The employer still owes the full California daily overtime pay either way — the distinction only affects which portion shows up as deductible on the federal return, not what the worker is actually paid for the week.
Common mistakes
The FLSA requires the weighted average across the whole workweek, not whichever specific rate applied when the overtime hours happened to occur — a commonly cited wage violation.
A plain average silently assumes equal hours at each rate; the correct method weights by actual hours worked, which rarely splits evenly.
Only the premium half qualifies for the 2026 deduction — the straight-time portion of overtime hours is taxed as ordinary wages with no special treatment.
A night or weekend differential is a different pay rate for FLSA purposes and belongs in the weighted average the same way a second job role does.
The federal 40-hour workweek threshold and the federal tax deduction don’t extend to state-specific daily overtime requirements, which some states layer on top independently.
A high earner assuming the full $12,500/$25,000 cap applies regardless of income can significantly overestimate the actual deductible amount once MAGI crosses the threshold.
State-required overtime that isn’t also required by the federal 40-hour weekly rule doesn’t generate deduction-qualifying premium, even though it’s real, legally-required pay.
Projecting a full year of overtime from one unusually busy pay period and reducing withholding accordingly can leave a real balance due at filing instead of the smoother outcome the adjustment is meant to provide.
What this calculator can't tell you
This is a planning estimate, not a paycheck or a filed tax return. It doesn't know a specific state's daily-overtime rules, which can require overtime pay for hours in a single day well before the federal 40-hour weekly threshold is reached — California's daily overtime rule is the most commonly cited example, but it isn't the only one. Those rules operate independently of both the FLSA weekly calculation and the federal tax deduction modeled here.
It also can't confirm FLSA exemption status. Whether a specific role is exempt from overtime requirements at all depends on actual job duties and salary level, not job title — a "manager" title alone doesn't make someone exempt, and getting this wrong is a distinct compliance question from the blended-rate math itself.
It doesn't know a specific employer's actual payroll system output, and it can't replace the W-2 Box 12 Code TT figure once that's issued — this is a planning estimate for before the year closes, not a substitute for the actual reported number when filing. It also can't calculate MAGI itself, which depends on the full tax return, not just wage income — the annual MAGI figure entered here needs to come from an actual estimate of the full return, not gross wages alone.
California isn't the only state with its own overtime layer, though it's the one with the most expansive rules. Alaska, Colorado, and Nevada each have some form of daily overtime or alternative-workweek provisions distinct from the federal weekly standard, and several other states set their own minimum-wage or exemption thresholds that interact with overtime eligibility differently than federal law does. A worker outside California who suspects a daily or alternative-schedule rule might apply should check that state's labor department directly — this calculator models the federal weekly standard only, not any state's specific variation.
It also can't account for a Belo plan, a fluctuating workweek method, or other alternative FLSA-compliant pay structures some employers use for employees with irregular hours — those methods calculate the regular rate and overtime premium differently than the straightforward hourly weighted-average method this tool assumes, and need their own specific calculation to stay compliant.
Frequently asked questions
Under the FLSA, most non-exempt employees are owed overtime pay of at least 1.5 times their regular rate for every hour worked beyond 40 in a single defined workweek. A workweek is a fixed, recurring 168-hour period an employer establishes in advance — it doesn't have to align with the calendar week, but it has to stay consistent once set, and an employer can't retroactively change it just to reduce overtime owed in a particular week.
Because the FLSA requires the overtime premium to be based on the employee's regular rate for the entire workweek — a weighted average of every rate earned, weighted by hours worked at each rate — not the specific rate in effect when the 41st hour happened to occur. Using only the rate active during overtime hours is one of the most commonly cited FLSA wage violations for employees working multiple roles or shifts, and it can happen even when an employer isn't trying to underpay anyone, simply from applying the wrong formula.
Yes — a shift differential is effectively a different pay rate for different hours, and the FLSA treats it the same way it treats two separate job rates: all compensation for hours worked gets folded into the weighted average before the overtime premium is calculated. Ignoring a night-shift differential when computing overtime is a common and specifically flagged compliance mistake, and non-discretionary bonuses like production or attendance bonuses generally need to be folded in the same way, since they too count as compensation for hours worked.
A federal income tax deduction created by the One Big Beautiful Bill Act (OBBBA) under IRC §225, in effect for tax years 2025 through 2028. It lets eligible W-2 employees deduct their qualified overtime premium — not their full overtime pay — from federal taxable income, up to $12,500 for single filers or $25,000 for married filing jointly, subject to a phase-out at higher income levels.
Only the premium portion — the extra 0.5× on top of the regular rate in a standard time-and-a-half structure. The straight-time 1× portion of overtime hours doesn't qualify, and it never shows up as a separate deduction line; it's simply taxed as ordinary wage income the same way any other hour of regular pay is.
Starting with the 2026 tax year (W-2s issued in January 2027), employers are required to report it directly: Form W-2 Box 12, Code TT, shows the year’s cumulative FLSA overtime premium. Box 1 still includes the full overtime pay as taxable wages — Code TT is informational, identifying which portion of that Box 1 total is eligible for the deduction on Schedule 1-A. For the 2025 transition year, this reporting was optional, so some 2025 W-2s may show the figure in Box 14 instead, or not report it separately at all.
The deduction cap is reduced by $100 for every $1,000 of MAGI above the threshold — $150,000 for single/head of household filers, $300,000 for married filing jointly. A single filer at $200,000 MAGI has $50,000 of excess income, which is 50 units of $1,000, for a $5,000 reduction — dropping the cap from $12,500 to $7,500. The deduction reaches zero around $275,000 MAGI for single filers and $550,000 for joint filers, a range wide enough that most overtime-heavy occupations never come close to it in ordinary practice.
No — the deduction is specifically for W-2 employees covered by the FLSA’s overtime requirement only. Self-employed people, independent contractors, and salaried employees who are exempt from FLSA overtime (most executive, administrative, and professional roles above the salary threshold) have no qualified overtime to claim, regardless of how many extra hours they actually work in a given week or how their income compares to a similarly busy hourly employee.
Yes — the deduction only affects federal income tax. Social Security and Medicare withholding, and the 0.9% Additional Medicare surtax where it applies, are calculated on full overtime wages exactly as before, with no reduction whatsoever. Most state income taxes also still apply in full unless a specific state separately adopts its own version of the exclusion, and none had done so as of this writing.
No — both the FLSA blended-rate requirement and the federal tax deduction are built around the federal 40-hour workweek threshold only. Several states (California among them) also require daily overtime after a set number of hours in a single day, which is a separate, state-specific requirement this calculator does not model, and which doesn't generate deduction-qualifying premium under the federal rule.
No — only the FLSA-required time-and-a-half premium qualifies for the federal deduction. If an employer voluntarily pays double time (2x) for certain hours, whether by company policy or a union contract, only the portion equal to the standard 0.5x FLSA premium counts as qualified overtime compensation; the extra premium above that required minimum does not qualify, even though it's genuinely overtime pay from the employee's perspective and taxed the same as any other wage income.
Yes — the "No Tax on Overtime" deduction is scheduled to sunset after December 31, 2028, applying only to tax years 2025 through 2028 unless Congress passes an extension. It was created as a temporary provision within the One Big Beautiful Bill Act, not a permanent change to how overtime is taxed.
No — the qualified overtime deduction is available whether or not a filer itemizes. It’s claimed on the newly created Schedule 1-A alongside Form 1040, the same form used for the related tips deduction, and reduces taxable income directly without requiring itemized deductions to exceed the standard deduction first, which is what makes it accessible to most overtime-earning workers regardless of their broader filing situation or income level.
Run your own numbers above, free, or check the hourly to salary calculator for the broader pay-comparison picture.
Glossary:Fully-Loaded Cost
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