Free No Tax on Overtime Calculator

The 2025 Trump tax law — officially the 'One Big Beautiful Bill Act' — created a federal income tax exemption for overtime pay. If you're a non-exempt hourly worker earning time-and-a-half for hours beyond 40 per week, that overtime pay is no longer subject to federal income tax for tax years 2025 through 2028. This calculator shows you exactly how much you save compared to the old rules where overtime was taxed like any other income.

Here's the important distinction: the exemption only covers federal income tax. FICA taxes — 6.2% for Social Security (up to the $176,100 wage cap) and 1.45% for Medicare (no cap) — still apply to your overtime pay. And most states have not conformed to the federal exemption, so your state will likely still tax overtime as regular income. The nine states with no income tax (Texas, Florida, Washington, Nevada, etc.) are the exception — they don't tax any income, overtime or otherwise.

The math is straightforward: your overtime pay equals overtime hours × hourly rate × 1.5. Under the old rules, that pay was added to your total income and taxed at your marginal bracket (anywhere from 10% to 37%). Under the new exemption, that portion skips federal income tax entirely. For a worker earning $30/hour with 10 weekly overtime hours in the 22% bracket, that's roughly $5,130 in annual federal tax savings. The higher your bracket and the more overtime you work, the bigger the benefit.

A few things to keep in mind: the exemption applies only to FLSA-defined overtime pay (1.5x rate for hours over 40/week). Bonuses, shift differentials, and premium pay that aren't tied to the 1.5x overtime rule don't qualify. And this law sunsets after December 31, 2028 — unless Congress extends it, overtime will be fully taxable again starting in 2029.