Overtime Tax Savings at $100/Hour
Working 10 overtime hours per week at $100/hour (time-and-a-half), you earn $78,000 in annual overtime pay. Under the 2026 overtime tax exemption, you'd save approximately $25,153 in federal taxes — keeping an extra $2,096 per month.
Pay Details
Tax Details
Compensation Breakdown
Federal tax comparison with and without the overtime exemption.
| Item | Annual | Monthly |
|---|---|---|
| Regular Pay | $208,000 | $17,333 |
| Overtime Pay | $78,000 | $6,500 |
| Total Gross | $286,000 | $23,833 |
| Federal Tax (normal) | $64,152 | $5,346 |
| Federal Tax (OT exempt) | $38,999 | $3,250 |
| FICA | $14,600 | $1,217 |
Annual Tax Savings
$25,153
If overtime is exempt from federal income tax
Overtime Pay
Effective Hourly Rate
Monthly Impact
What This Means
The 2026 overtime tax exemption allows qualifying non-exempt employees to exclude overtime pay from federal income tax. At $100/hour, your overtime rate is $150/hour (time-and-a-half). Working 10 overtime hours per week, you earn $78,000 in annual overtime pay. Without the exemption, this overtime income would be taxed at your marginal federal rate. With the exemption, you save $25,153 in federal taxes annually — that's $2,096 more in your pocket each month. To qualify, you must be a non-exempt employee under the Fair Labor Standards Act (FLSA) and your overtime must exceed 40 hours in a workweek. Important: FICA taxes (6.2% Social Security + 1.45% Medicare) still apply to overtime pay. Self-employed individuals and exempt (salaried) employees generally do not qualify for this exemption.