The Overtime Premium: How 1.5x Works
Under the Fair Labor Standards Act (FLSA), non-exempt employees must receive 1.5 times their regular rate for every hour worked beyond 40 in a workweek. If you earn $20/hr, your overtime rate is $30/hr. If you earn $30/hr, overtime pays $45/hr.
Overtime rates at common hourly wage levels
| Base Hourly Rate | Overtime Rate (1.5×) | Premium Per OT Hour |
|---|---|---|
| $15/hr | $22.50/hr | +$7.50 |
| $20/hr | $30.00/hr | +$10.00 |
| $25/hr | $37.50/hr | +$12.50 |
| $30/hr | $45.00/hr | +$15.00 |
| $40/hr | $60.00/hr | +$20.00 |
Annual Salary With Regular Overtime Hours
If you regularly work 5 hours of overtime per week (45-hour weeks), your annual income calculation changes substantially. You earn regular pay for 40 hours and time-and-a-half for 5 hours — effectively 47.5 'equivalent' hours per week.
Annual salary impact of regular overtime hours
| Hourly Rate | 40 hrs/wk (No OT) | 45 hrs/wk (5 hrs OT) | 50 hrs/wk (10 hrs OT) |
|---|---|---|---|
| $18/hr | $37,440/yr | $42,120/yr (+$4,680) | $46,800/yr (+$9,360) |
| $22/hr | $45,760/yr | $51,480/yr (+$5,720) | $57,200/yr (+$11,440) |
| $28/hr | $58,240/yr | $65,520/yr (+$7,280) | $72,800/yr (+$14,560) |
| $35/hr | $72,800/yr | $81,900/yr (+$9,100) | $91,000/yr (+$18,200) |
If your base salary puts you near the top of the 12% bracket ($47,150 for single filers in 2025), regular overtime income may push earnings into the 22% bracket. Only the income above the threshold is taxed at 22% — but plan your withholding accordingly to avoid a tax bill.
Weekly vs. Daily Overtime: The Difference Matters
Most states follow federal rules: overtime triggers after 40 hours in a workweek. California is the major exception — workers there earn overtime after 8 hours in a single day, and double time (2×) after 12 hours in a day or after 8 hours on the 7th consecutive day. This can significantly increase annual income for California hourly workers.
Overtime and Effective Annual Salary: Real Examples
Consider a construction worker earning $28/hr in a high-demand season. Working 10 hours of overtime per week for 30 weeks (half the year) generates: 30 weeks × 10 OT hours × $42 = $12,600 in overtime premium pay on top of their $58,240 base. Total annual income: $70,840 — $12,600 more than their 'headline' salary suggests.
Overtime income is real money, but don’t build your budget around it. If overtime fluctuates, base your fixed expenses (rent, car, debt payments) on your 40-hour base salary. Use overtime income for savings, debt payoff, or discretionary spending.
Calculate Your Annual Salary With Overtime
Enter your hourly rate and average overtime hours — see your true annual income.