How Overtime Is Taxed in the United States
A widespread personal finance myth claims that "working overtime puts you in a higher tax bracket and makes you lose money." This is mathematically false under America's progressive tax bracket system.
Because tax brackets are marginal, only the dollars earned within the higher tax bracket are taxed at the higher percentage rate. Every hour of overtime you work always increases your total net take-home pay.
Federal FLSA Overtime Rules:
- Standard Overtime (1.5x): Paid for any hours worked over 40 hours in a 7-day workweek.
- Double Time (2.0x): Some states (such as California) require double time pay for hours worked over 12 in a single workday or hours worked beyond 8 on the 7th consecutive day of work.