To calculate overtime pay, multiply the employee’s regular hourly rate by 1.5, then multiply that by every hour worked over 40 in the workweek. Add the result to pay for the first 40 hours. At $22 an hour, a 46-hour week is 40 hours at $22 plus 6 hours at $33.
That is federal law under the Fair Labor Standards Act for nonexempt employees, and it covers most hourly workers. The method gets harder when pay includes a bonus, two rates, a salary or a pay period longer than a week, so each of those is worked through below with real numbers.
The basic overtime formula
Three numbers decide overtime: the regular rate, the hours worked in the workweek, and the multiplier. Under the Department of Labor’s rule, any hour past 40 earns at least 1.5 times the regular rate.
- Total the hours actually worked in the workweek.
- Subtract 40 to get the overtime hours. Zero or less means no overtime.
- Multiply the regular rate by 1.5 for the overtime rate.
- Pay the first 40 hours at the regular rate and the overtime hours at the overtime rate.
Here is that week for a production baker earning $22 an hour, laid out the way it prints on a pay stub:
| Earnings line | Hours | Rate | Amount |
|---|---|---|---|
| Regular pay | 40 | $22.00 | $880.00 |
| Overtime (1.5x) | 6 | $33.00 | $198.00 |
| Gross pay | $1,078.00 |
The same $1,078.00 split another way: $1,012.00 of straight time for all 46 hours, plus a $66.00 half-time premium on the 6 overtime hours. Over 50 weeks like this one, the premium adds up to $3,300.00.
Both layouts give the same gross. The second one, straight time for every hour plus a half-time premium, is the method the Department of Labor uses in its own examples. It is the one that still works when the regular rate is not simply the hourly wage.
What counts as a workweek
A workweek is a fixed, regularly recurring 168 hours: seven consecutive 24-hour periods. It does not have to run Sunday to Saturday.
A bakery can start its week at 6 a.m. Wednesday. Changing the start later is allowed only if the change is meant to be permanent and is not designed to avoid overtime (29 CFR 778.105).
Each workweek stands alone. The Department of Labor says hours cannot be averaged over two or more weeks, which is where biweekly payroll catches people out:
| Workweek | Hours | Regular | Overtime | Pay |
|---|---|---|---|---|
| Week 1 | 50 | 40 | 10 | $1,210.00 |
| Week 2 | 30 | 30 | 0 | $660.00 |
| Pay period | 80 | 70 | 10 | $1,870.00 |
Treating the period as two average 40-hour weeks would pay $1,760.00, which is $110.00 less than the employee is owed.
Saturdays, Sundays and holidays carry no overtime under federal law. Only the weekly total matters, unless a state or a contract says otherwise.
Bonuses change the regular rate
The regular rate is not always the hourly wage. It is everything paid for the week’s work divided by the hours worked, and that includes nondiscretionary bonuses: production, attendance, safety or shift bonuses promised in advance.
| Step | Working | Amount |
|---|---|---|
| 1. Straight time for every hour | 46 × $22.00 | $1,012.00 |
| 2. Add the bonus | Nondiscretionary, so it counts | $60.00 |
| 3. Regular rate | $1,072.00 ÷ 46 hours | $23.30 |
| 4. Half-time premium | $11.65 × 6 overtime hours | $69.91 |
| Total for the week | Steps 1 + 2 + 4 | $1,141.91 |
Paying time and a half on the $22.00 base rate and adding the bonus on top gives $1,138.00, which is $3.91 short.
Only bonuses decided at the employer’s sole discretion, holiday gifts and a few other payments listed by the Department of Labor stay out.
A bonus earned over a month or a quarter is spread back over the weeks it covers, and each overtime week in that stretch gets extra half-time pay on its share (29 CFR 778.209).
Two pay rates in one week
When one employee works two jobs at different rates in the same week, the regular rate is the weighted average: total straight-time pay divided by total hours. The half-time premium comes from that average, not from whichever rate happened to be in effect on the late shift.
| Work | Hours | Rate | Straight time |
|---|---|---|---|
| Counter and packing | 30 | $18.00 | $540.00 |
| Delivery driving | 14 | $24.00 | $336.00 |
| Weighted regular rate | 44 | $19.91 | $876.00 |
| Half-time premium | 4 | $9.95 | $39.82 |
| Total for the week | $915.82 |
A second option exists: the overtime can be paid at 1.5 times the rate of the work done during the overtime hours. It needs an agreement with the employee before the work is performed, so most small businesses stay with the weighted average.
Salaried employees can get overtime too
A salary does not make someone exempt. Exemption needs both a qualifying job (executive, administrative or professional duties, among others) and pay of at least $684 a week on a salary basis, which is $35,568 a year. Employees paid less are generally owed overtime, however their pay is described.
For a nonexempt salaried employee, divide the weekly salary by the hours it is meant to cover. A $1,000 salary for a 40-hour week is a $25 regular rate, so 5 extra hours earn $37.50 each.
Turn a biweekly salary into a weekly one by halving it; a monthly salary is multiplied by 12 and divided by 52.
If the salary is meant to cover every hour worked, however many there are, the hourly figure changes from week to week. The Department of Labor’s own example: $405 for a 45-hour week is a $9.00 regular rate, so the 5 overtime hours earn an extra half rate, $4.50 each.
State overtime rules
Where state law is more generous, the employee gets the better rule. California is the best-known case: time and a half after 8 hours in a workday and double time after 12, even if the week totals less than 40 hours.
Check your state labor department before running payroll in a new state. The federal weekly rule is the minimum everywhere, and several states add daily or seventh-day rules on top.
Overtime and the new tax deduction
For tax years 2025 through 2028, employees can deduct the premium part of federally required overtime: the “half” in time and a half. In the first example, that is $6 x $11 = $66 of the $198 overtime line. The straight-time part of each overtime hour does not count.
The deduction is capped at $12,500 a year, or $25,000 on a joint return, and shrinks once modified adjusted gross income passes $150,000 ($300,000 joint). Overtime paid only because of a state law or a union contract is not included, according to the IRS.
The deduction is claimed on the employee’s tax return. Employers may not cut income tax withholding to allow for it, and Social Security and Medicare still apply to every overtime dollar (IRS FS-2026-13).
From 2026, employers report the amount on Form W-2 in box 12 with code TT, explained with the other box 12 codes.
Putting overtime on a pay stub
Show overtime on its own earnings line with its hours, rate and amount, separate from regular pay. The employee can check the premium, and the year-to-date column keeps a running total that makes the W-2 figure easy to confirm.
Our free pay stub generator does this when you enter overtime hours: it adds an “Overtime (1.5x)” line beside regular pay and carries both into the year to date. Taxes are then figured on the whole gross pay, overtime included, the same as any other wages.
For a pay period longer than a week, work out each week first, then add them up. The biweekly vs semimonthly comparison shows why semimonthly periods that split a workweek need extra care.
Sources: DOL Fact Sheet #23, Overtime Pay Requirements of the FLSA; 29 CFR 778.209 and 778.113; DOL, salary levels for the white-collar exemptions; IRS FS-2026-01; California DIR overtime FAQ. Checked October 18, 2026.
