No Tax on Overtime Calculator
"No tax on overtime" is a proposed federal policy that would exempt overtime wages from federal income tax, putting more of every extra hour back in workers' pockets. The idea was a major 2024 campaign pledge and remains under active discussion in Congress. This calculator estimates how much more you could take home if the exemption becomes law — compare side by side with what you keep today.
Estimated Annual Impact
Estimate based on 2026 federal brackets, 6.2% Social Security, 1.45% Medicare, and average state income tax. Assumes only the federal income tax portion of overtime wages becomes exempt; FICA and state tax still apply.
What "No Tax on Overtime" Would Actually Do
The proposal — a centerpiece of the 2024 Trump campaign and reintroduced in early 2025 — would exclude overtime premium wages from federal income tax for non-exempt workers covered by the Fair Labor Standards Act. Some versions of the bill also exempt the entire overtime paycheck rather than just the premium portion; this calculator assumes the full overtime wage is exempt from federal income tax, which is the most-discussed version.
Who Would Benefit Most
- Hourly workers in high overtime industries — nursing, manufacturing, construction, hospitality, and logistics often run 10+ overtime hours per week.
- Workers in higher tax brackets — the higher your marginal federal rate, the bigger the per-hour benefit.
- Workers in no-income-tax states — Texas, Florida, Tennessee, etc. would see the full benefit since there's no state tax to offset.
What Wouldn't Change
Even under the proposed exemption, you'd still owe Social Security (6.2%) and Medicare (1.45%) on overtime wages, plus any applicable state and local income taxes. Most versions of the legislation also keep the overtime exemption out of bonus pay, commissions, and salaried-exempt earnings.