💼 Is Overtime Taxable in California?
Yes, taxable — but deduct up to $12,500 from federal taxes (2026-2028).
Most California workers overpay. Check how much you could get back.
Calculate Your Savings🤔 Does Your Overtime Qualify for the Deduction?
Average tax savings for California overtime workers:
$1,200 – $3,000/year
depending on overtime hours and federal tax bracket
🧮 Overtime Tax Calculator
Estimate Your Overtime Tax Savings
* Based on FLSA overtime only. CA daily overtime does NOT qualify. Subject to $150k/$300k income phaseout.
⚙️ How Overtime Taxation Works
📋 Key Facts You Need to Know
What it is: Deduct the "half" portion of time-and-a-half pay
Maximum: $12,500/year ($25,000 joint filers)
Phaseout: Begins at $150k single / $300k joint
Key point: Only FLSA overtime (40+ hrs/week) qualifies
Tax rates: 9 brackets from 1% to 12.3%
Mental health surcharge: +1% on income over $1M (13.3% top rate)
No state deduction: California doesn't offer overtime deduction
FLSA (Federal): Overtime after 40 hours/week — QUALIFIES for deduction
California: Overtime after 8 hours/day — does NOT qualify
Double time (CA): After 12 hrs/day or 8+ hrs on 7th day — does NOT qualify
Not in your paycheck: Overtime is still fully taxed upfront
Claimed at tax time: Deduction reduces taxable income when you file
Result: Larger refund or reduced tax owed
⚠️ Common Mistakes to Avoid
- Mistake #1: Thinking overtime is "taxed at a higher rate." It's taxed the same—it just adds to total income, potentially pushing some into higher brackets.
- Mistake #2: Assuming California daily overtime qualifies for the deduction. Only FLSA overtime (40+ hrs/week) qualifies.
- Mistake #3: Expecting reduced withholding in 2025. The deduction is claimed when filing, not through paycheck.
- Mistake #4: Forgetting California state tax. You still owe full CA tax on all overtime—no state deduction.
❓ Frequently Asked Questions
With 10 hours of weekly overtime at $30/hr, you could save $1,700-$2,900/year in federal taxes. The exact amount depends on your tax bracket (10%-37%).
$12,500/year ($25,000 for joint filers). This caps the tax savings at roughly $2,900-$4,600 depending on your bracket.
Claim it when you file your federal tax return. It's an above-the-line deduction, so you don't need to itemize. Keep records of your overtime hours.
No. Only federal FLSA overtime (over 40 hours/week) qualifies. California's daily overtime rule (over 8 hrs/day) is state law, not FLSA.
When you file your 2025-2028 tax returns. Overtime is still fully withheld from paychecks—the deduction reduces taxable income at filing time, resulting in a larger refund.
No—same tax rate as regular income. It may push some earnings into a higher bracket, but only the portion in that bracket is taxed higher.
✅ Conclusion
Overtime is taxable in California at both federal and state levels. The new federal deduction (2025-2028) provides savings on FLSA overtime, but California's daily overtime does not qualify. You'll still pay full taxes upfront, then claim the deduction when filing.
Disclaimer
This is general information, not tax advice. Tax laws change. The OBBBA provisions are effective 2025-2028. Consult a tax professional for your specific situation.