Is Overtime Taxable in 2025?
If you’re working extra hours and earning overtime pay in 2025, you might be wondering: do I have to pay taxes on it? The answer is straightforward—yes, overtime pay is taxable under current federal laws.
Overtime Is Treated as Regular Taxable Income
In 2025, overtime pay is taxed just like your regular wages. That means any extra money you earn for working beyond 40 hours in a workweek will be included in your gross income and subject to all the usual federal tax withholdings.
Whether you earn time-and-a-half, double-time, or bonus pay related to overtime, it all counts as taxable income.
What Taxes Apply to Overtime Pay?
Your overtime earnings in 2025 are subject to the following federal taxes:
Federal Income Tax – Based on your tax bracket and total income
Social Security Tax (6.2%) – Applies to wages up to the annual limit ($168,600 in 2025)
Medicare Tax (1.45%) – Applies to all wages, with an additional 0.9% for high earners
So, if you earn more overtime, you might move into a higher tax bracket, or trigger additional taxes like the extra Medicare tax if your income exceeds certain thresholds.
State Taxes Vary
If you live in a state with income tax, your overtime pay will likely be taxed at the state level too. However, if you live in a tax-free state like Texas, Florida, or Washington, you’ll only need to worry about federal taxes on your earnings.
No Exemptions for Overtime in 2025
Although there have been discussions in Congress about making overtime pay exempt from federal income tax, no such law has been passed as of 2025. That means the current rules still apply: all earnings, including overtime, are fully taxable.
Final Thoughts
While overtime can boost your paycheck, it also increases your taxable income. Make sure you're accounting for those extra withholdings when budgeting or planning your tax return. If you regularly earn significant overtime, consider speaking with a tax advisor to avoid surprises during tax season.