The three-part formula, in one paragraph
Overtime pay is two paychecks in one: regular pay for your standard hours, plus premium pay for the extra hours. Split your hours into regular and overtime, multiply your normal rate by the overtime multiplier (usually 1.5) to get the overtime rate, then multiply that rate by the overtime hours and add it to the regular pay. Three short multiplications and one addition — the worked example below shows each one with real numbers.
Step 1: Split your hours into regular and overtime
Under the federal Fair Labor Standards Act, non-exempt employees earn overtime for hours worked past 40 in a single workweek — that is the 1.5× floor in the United States. "Hours worked" is the operative phrase: vacation, holidays, and sick leave do not count toward the 40. Work 40 hours and take an 8-hour holiday, and you have 40 hours of regular pay and zero of overtime.
Two wrinkles change the split. Some states trigger overtime after 8 hours in a day instead of 40 in a week — California also pays double time after 12. And some employers and union contracts pay double time on holidays or very long shifts regardless of the law. The math below is identical either way; you just put more hours in the overtime bucket.
Step 2: Find your overtime rate
Multiply your normal hourly rate by the overtime multiplier:
At $20 an hour, the overtime rate is $30 an hour — every overtime hour is worth $10 more than a regular one. That $10 gap is the premium, and it is the part of overtime that matters most under the 2026 tax rules below. If your employer pays double time, use 2 instead of 1.5; if your contract sets something unusual like 1.75×, use that.
Step 3: Multiply the rate by the overtime hours, then add
Now the two halves come together:
The overtime rate is only worth anything once it is multiplied by the overtime hours. People trip up almost exclusively on Step 1 — counting hours that were never overtime hours at all.
Worked example: $20 an hour, 40 regular hours, 10 overtime hours
Step 2: overtime rate = $20 × 1.5 = $30 an hour.
Step 3: regular pay = $20 × 40 = $800. Overtime pay = $30 × 10 = $300.
Total: $800 + $300 = $1,100.
Answer: $1,100 gross for the week. Ten overtime hours is 20% more time than the 40 regular hours, but it supplies 27% of the week's pay. That premium gap is why a single overtime shift can move a monthly budget more than it looks like it should. Prefer a calculator? The free overtime pay calculator runs all three steps instantly with any rate and any multiplier.
Step 4: Adjust for your real rules
If your state uses daily overtime, split the hours day by day: an 11-hour shift might contribute 8 regular hours and 3 overtime hours, even when the week total never crosses 40. If a holiday week mixes rates, run each rate separately — 8 holiday hours at double time, 4 extra hours at time-and-a-half — and add the results. And when comparing job offers, an hourly role with reliable overtime can quietly out-earn a higher base rate with none; the hourly to salary calculator puts both offers in the same annual terms.
Bonuses get blended into your rate first
A non-discretionary bonus — production, attendance, or shift bonuses promised in advance — is folded into your hourly rate before the 1.5× multiplier: the bonus is spread across hours worked to form a higher "regular rate," and overtime is calculated from that. A truly discretionary bonus, like a surprise gift, does not count.
Overtime and taxes: the 2026 note
Overtime pay is taxed at your normal marginal tax rate. The reason overtime checks look heavily taxed is withholding: a bigger check can pull a larger withholding estimate for that one pay period, and the surplus comes back at tax time. Only the dollars above each bracket line are taxed at the higher rate.
The slogan "no tax on overtime" needs the same careful reading. An IRS clarification in 2026 created a federal deduction — but only the premium half qualifies. On a $30 overtime hour with a $20 base rate, the deductible amount is the $10 premium, not the full $30. It is capped at roughly $12,500 a year for single filers and $25,000 for joint filers, phases out above $150,000/$300,000 of modified adjusted gross income, and Social Security, Medicare, and state taxes still apply to all of it. Timely FYI, not tax advice — the rules are new and may still be changing.
Frequently asked questions
How do I calculate time-and-a-half quickly?
Multiply your hourly rate by 1.5 — or add half of it again. The mental shortcut: half of $24 is $12, so time-and-a-half is $36. For the weekly total, multiply overtime hours by that rate and add your regular pay.
Do I get paid overtime if I work less than 40 hours but more than 8 in a day?
Under federal law, overtime is purely weekly — a single long day with a short week is not overtime. But states with daily overtime rules, like California, do pay 1.5× after 8 hours in a day even when the week total stays under 40. Check your state's labor rules.
Is working overtime worth it after taxes?
Almost always, yes. The higher withholding on a fat overtime check is an estimate, not your real tax bill — any excess comes back at tax time. Since only income above each bracket line is taxed at the higher rate, and the overtime premium itself is 1.5× your rate, the extra hours still put you comfortably ahead.
What counts toward the 40 hours that trigger overtime?
Only hours you actually worked. Vacation, holidays, sick leave, and paid days off do not count. This is the most common source of overtime confusion: 32 worked hours plus an 8-hour holiday means zero overtime hours under federal law.
Does a weekly bonus raise my overtime rate?
If the bonus is non-discretionary — promised in advance, like a production or attendance bonus — yes. It gets spread across your hours to form a higher "regular rate," and the 1.5× multiplier applies to that. A truly discretionary bonus does not count.
Try it: run your own numbers through the free overtime pay calculator — any hourly rate, time-and-a-half, double time, or a custom multiplier, with an instant breakdown of regular pay, overtime rate, and total. Converting pay to annual terms? The hourly-to-salary guide and calculator take it from there.