Is overtime taxed at a higher rate?

No. Overtime hours are paid at 1.5x but taxed at the same rate as regular wages. A single big paycheck can look over-withheld because payroll annualizes it. The over-withholding comes back as a refund at filing time.

What is the federal minimum wage?

$7.25 per hour. Most states are higher. Your employer must pay the higher of state and federal.

Why is my pay stub rate lower than my offer letter?

Compare again carefully. If they really do not match, document and ask payroll in writing. Small variances can come from rounding to nearest cent on a different conversion (annualized vs hourly).

Hourly Worker Paycheck Guide (2026)

Hourly workers see a paycheck that rises and falls with hours worked. Same hours one week, fewer the next, and your net swings. Here is how the math goes, line by line.

PayslipIQ provides educational information and estimated calculations only. It does not provide tax, legal, financial, accounting, employment, benefits, or payroll advice. PayslipIQ is not a CPA firm, law firm, financial advisor, payroll provider, or tax authority. Always verify your paycheck, deductions, withholdings, and tax position with your employer's payroll department, a qualified CPA, the IRS, your state tax authority, or another appropriately qualified professional. Calculations are estimates; your actual paycheck may differ based on factors specific to your employer, location, benefits elections, and personal tax situation.

The arithmetic

Gross per pay period equals (regular hours times regular rate) plus (overtime hours times 1.5 times regular rate). Federal FLSA requires 1.5x for hours above 40 in a workweek. California, Alaska, Nevada and Colorado add daily-overtime rules on top.

From that gross, federal income tax comes off (per your W-4 and IRS Publication 15-T). Then FICA: 6.2 percent Social Security up to the wage base, plus 1.45 percent Medicare flat. State income tax applies in 41 states plus DC. NYC, Philadelphia, Detroit and several Ohio cities tack on local tax.

Things that catch hourly workers out

Shift differentials count for overtime

If you earn a $4 night-shift differential, FLSA overtime is calculated on the differential-included regular rate, not the base. So overtime on a night shift can be 1.5 times $24 instead of 1.5 times $20.

Tipped wages have a different floor

Federal tipped minimum wage is $2.13 per hour. Your employer must top up so tips bring you to at least the regular minimum across the workweek. Several states do not allow this tip credit.

Comp time

Private-sector employers in most states cannot give time off in lieu of overtime pay. Public-sector rules differ.

Use the calculator

The PayslipIQ paycheck calculator handles hourly. Set frequency to weekly or bi-weekly, enter hours times rate as gross, pick your state. The output breaks out federal, FICA, state and net.

Frequently asked questions

Is overtime taxed at a higher rate?: No. Overtime hours are paid at 1.5x but taxed at the same rate as regular wages. A single big paycheck can look over-withheld because payroll annualizes it. The over-withholding comes back as a refund at filing time.
What is the federal minimum wage?: $7.25 per hour. Most states are higher. Your employer must pay the higher of state and federal.
Why is my pay stub rate lower than my offer letter?: Compare again carefully. If they really do not match, document and ask payroll in writing. Small variances can come from rounding to nearest cent on a different conversion (annualized vs hourly).