Why is my after-tax overtime rate so close to my regular rate?

Because overtime pay is taxed at your marginal rate, not your average rate. If you're in the 22% federal bracket, every dollar of overtime is taxed at 22% federal + your state rate — the same as your last regular dollars of salary. The 1.5x gross rate advantage is partially erased by marginal taxation. At higher income levels (24% or 32% bracket), the after-tax difference between regular and OT pay narrows further.

How do I calculate the true cost of working overtime?

True OT cost = after-tax OT rate − (time costs ÷ hours worked). Time costs include: childcare (if applicable), incremental commute cost if OT requires extra trips, additional meal costs (work lunch/dinner that you wouldn't buy otherwise), and wear costs on your vehicle if driving. Divide the total time costs by the overtime hours to get your cost per OT hour, then subtract from your gross after-tax rate.

Is overtime income taxed differently than regular income?

No — overtime is ordinary income and taxed at your marginal rate, the same as your last dollars of regular salary. There is no special tax rate for OT. However, if overtime pushes your total income into a higher bracket, those additional dollars are taxed at the higher rate (e.g., from 22% to 24%). The calculator handles bracket transitions automatically.

When is a side hustle better than overtime?

A side hustle can be better when: (1) your after-tax hourly rate from the side hustle is higher than your after-tax OT rate after costs; (2) the side hustle has growth potential or skill-building value that overtime doesn't; or (3) the side hustle involves flexible hours with lower time costs (no commute, no childcare requirement). Use the comparison section to see which path to your goal is more efficient with your specific numbers.

How many overtime hours to reach my savings goal?

The calculator computes this directly: divide your goal amount by your true after-tax OT rate (accounting for time costs). If you're saving for a $10,000 vacation and your net OT rate is $28/hr, you need 357 hours of overtime — roughly 8.9 weeks at 40 extra hours/week, or 34 weeks at 10 extra hours/week. This calculation usually surprises people with how long it actually takes.

💵Income & Budget

Overtime Value Calculator — What Is an Hour of Overtime Actually Worth After Tax?

After taxes and costs, what does an hour of overtime actually pay you?

What This Does

Overtime looks like a premium. The 1.5x or 2x headline rate sounds like a meaningful boost. But after marginal income taxes, the actual take-home rate is often much closer to your regular pay than you'd expect — and when you factor in the opportunity cost of time (childcare, commuting, meals), it can be negative. The Overtime Value Calculator computes the exact after-tax value of every overtime hour you work. It takes your base salary, calculates your real marginal tax rate on overtime income (federal + state), applies your specific overtime multiplier (1.5x, 2x, or shift differential), and shows you what you actually keep per hour after the government takes its share. Then it layers in the time costs — commute, childcare, meal expenses — that are often invisible in the headline rate but are real costs of the extra hour. The result: your true overtime rate. Not the gross rate your employer pays — the net rate that actually shows up in your life. The calculator also builds a break-even analysis: how many overtime hours do you need to reach a specific financial goal? And it compares three scenarios — working overtime, skipping overtime, and a side hustle — to help you see whether the extra hours at work are actually the most efficient path to your financial target.

Assumptions

·Marginal tax rate applied to overtime income (not average rate)
·Bracket transition modeled when overtime pushes income above bracket threshold
·Time costs (commute, childcare, meals) deducted from gross after-tax rate
·Side hustle comparison assumes same hourly rate as OT, self-employment tax 15.3%

When Should You Use This?

→You are deciding whether to volunteer for overtime or extra shifts and want to know the true take-home
→You are comparing the financial value of overtime vs starting a side hustle with the same hours
→You want to know how many overtime hours you need to reach a specific goal (debt payoff, purchase, savings)
→You are evaluating a job offer with mandatory overtime and want to calculate the real effective hourly rate
→You are negotiating shift differentials or overtime rates and want to understand the after-tax impact

Example Scenario

Carlos earns $72,000/year ($34.62/hr). He can work 10 hours of overtime per week at 1.5x ($51.92/hr gross). After 24% federal + 6% state taxes, his after-tax overtime rate is $35.31/hr — only $0.69 more than his regular after-tax rate of $34.62/hr. But he pays $15/day in childcare on overtime days and $12 in commute. Net value per overtime hour: $35.31 − ($27/10) = $32.61/hr. He's working harder for what is effectively the same hourly rate. The calculator surfaces this immediately.

⏱️ Overtime Value Calculator