Methodology

Each of the seven days you enter is split into regular, time-and-a-half and double-time hours. State daily rules run first: California over 8 and over 12, Alaska over 8 (unless the employer has fewer than four employees), Colorado over 12, Nevada over 8 when the rate is below 1.5× the state minimum wage, and Oregon over 10 for manufacturing. Seventh-day rules apply when all seven days have hours: California’s 8/2× split and Kentucky’s time and a half for the whole seventh day once the week passes 40 hours.

Then the weekly rule runs on the hours still classed as regular, taking the latest days first, so no hour is paid twice. For Colorado, whose order pays “whichever calculation results in the greater payment,” this method gives the same result as computing daily and weekly overtime separately and taking the larger. For example, seven 9-hour days in California give 40 regular hours, 22 at 1.5× and 1 at 2×.

The regular rate is straight-time pay for all hours plus any non-discretionary bonus, divided by total hours (29 CFR 778.109–.110). Each 1.5× hour adds half the regular rate; each 2× hour adds a full regular rate. For California flat-sum bonuses the engine follows the Labor Commissioner instead: bonus ÷ regular hours, paid at the full 1.5× or 2× on overtime hours. The weekly total is straight-time pay plus all premiums.

Qualified overtime for the week is ½ × the FLSA regular rate × hours over 40 — never state-only or double-time extras (IRS FS-2026-13). It is multiplied by the weeks you choose, or replaced by your W-2 box 12 code TT figure. The annual amount is capped at $12,500 ($25,000 joint) and reduced by $100 for each full $1,000 of modified AGI over $150,000 ($300,000 joint), dropping fractions as Schedule 1-A instructs: $14,000 qualified at $160,500 MAGI gives $11,500. Married filing separately gets nothing. The tax saving is the difference in tax under the year’s published brackets with the standard deduction; for years whose brackets are not yet published you choose your marginal rate.

Every state record holds the income-tax treatment of the overtime deduction for each tax year 2025–2028 and its minimum wage as dated windows. The calculator picks the window that contains today’s date. A window that has ended with no verified successor switches to an explicit “enter your official figure” state; an automated test fails the build if any window ends within 45 days with no successor at all. Numbers in the calculator are rounded only for display; the engine keeps full precision.

What we do not model: exempt-employee salary tests, alternative workweeks, collective bargaining terms, tipped-wage credits, multiple pay rates in a week, bonuses spanning several weeks, local minimum wages and state income-tax amounts. Each is named on the page where it matters. Rules last verified October 5, 2026.

• Exempt (salaried) employees and jobs outside FLSA coverage — the calculator assumes you are owed overtime.
• California alternative workweek schedules, Alaska flexible work-hour plans and any union contract terms.
• Federal employees, public-safety work periods and comp time, which run on other rules.
• Several pay rates in one week, bonuses earned over several weeks, and tipped-wage credits.
• Social Security and Medicare (overtime is still subject to both), withholding, credits and itemized deductions.
• Local minimum wages. For tax years after 2025 you can deduct only what your employer reports in W-2 box 12, code TT; the “weeks like this a year” and modified-AGI fields are estimates you control, and the W-2 box overrides the estimate.