Is Overtime Worth It — What Do You Actually Keep After Taxes and Time Costs?

The federal Fair Labor Standards Act requires most hourly employees to receive 1.5× their regular rate for hours above 40 per week. That's the gross rate — what your employer pays before the government takes its share. The after-tax rate is what you actually keep.

If you're in the 22% federal bracket with 6% state tax, your marginal rate on overtime income is 28%. Every dollar of OT gross loses $0.28 before you see it. The 1.5× multiplier on a $35/hr base = $52.50 gross. After 28% tax: $37.80/hr. That's $2.80 more per hour than your regular after-tax rate of $35 × 0.72 = $25.20/hr. Wait — that math is actually better than it sounds: it's $37.80 vs $25.20 in after-tax dollars. But the comparison most people make is wrong: they compare $52.50 gross to $35 gross (a 50% premium) rather than $37.80 vs $25.20 net.

Then come the time costs. If working an OT shift requires $15 in commute and $12 in meals you wouldn't otherwise buy, and you're working a 4-hour OT shift, that's $27 / 4 hours = $6.75/hour of true cost. Your real OT rate: $37.80 − $6.75 = $31.05/hr. Is that worth it? Depends on your goal — but at least you know the real number.

Overtime is worth it when: (1) Your time costs are low (remote work, no childcare impact, flexible schedule). (2) You have a specific, finite financial goal — debt payoff, down payment, emergency fund — that OT income will meaningfully accelerate. (3) The OT is temporary and you have a clear end date, preventing lifestyle inflation from absorbing the extra income.

Overtime is not worth it when: (1) Daily time costs bring your net OT rate below your regular take-home (you're paying to work more). (2) The extra income is absorbed by lifestyle spending with no lasting financial impact. (3) The physical or mental cost of the extra hours is affecting your performance in your primary job, risking your base income.

The alternative question: is there a better use of those hours? A side hustle with the same gross rate as OT will often have a lower net rate (self-employment taxes at 15.3%), but may have growth potential, skill-building value, or flexibility that straight OT doesn't offer. The calculator compares all three scenarios — regular pay, OT, and side hustle — so you can make this comparison explicitly.