What "time and a half" actually means
Under the federal Fair Labor Standards Act, non-exempt employees must be paid at least 1.5× their regular rate for every hour worked beyond 40 in a workweek. At $25 an hour, your overtime rate is $37.50, so ten overtime hours add $375 to a week, not $250. Over a year that's an extra $19,500, which is why overtime can be worth more than a raise for hourly workers.
The 40-hour workweek rule
Federal overtime is calculated per workweek, not per pay period and not per day. A fixed, recurring seven-day period is your workweek; work 50 hours one week and 30 the next and you're still owed 10 hours of overtime, even though the two-week total is 80. Some states go further: California, for example, requires daily overtime after 8 hours and double time after 12, so check your state's rules, which always override the federal floor when they're more generous.
Your "regular rate" isn't always your hourly rate
This is the most commonly miscalculated part of overtime pay. The regular rate used for the 1.5× multiplier must include most other compensation: nondiscretionary bonuses, shift differentials, and commissions, divided across the hours worked. If you earn a production bonus, your true regular rate (and therefore your overtime rate) is higher than your base hourly wage. Discretionary gifts and true holiday bonuses are excluded.
Who qualifies
Overtime protection covers non-exempt employees. Workers are exempt only if they're paid a salary above the federal threshold and their actual duties fit an executive, administrative, professional, computer, or outside-sales exemption. Job titles don't decide it. Duties do. Being paid a salary alone does not make someone exempt, and misclassification is one of the most common wage violations.
Is overtime taxed more?
No, and this is worth being clear about. Overtime is ordinary income taxed at your normal rates. What happens is that a bigger paycheck triggers higher withholding, because payroll systems annualize each check as if you earned that much every period. A single heavy-overtime week can look brutally taxed; the year-end return settles the difference. Under the 2025 OBBBA legislation a portion of the overtime premium (the extra half) is also deductible through 2028. See our new deductions guide.
Deciding whether it's worth it
Overtime is one of the few ways to increase income without changing jobs, and because the extra hours are paid at 1.5×, the after-tax return per hour is usually well above your regular rate even in a higher bracket. Compare the annual figure above with what an equivalent salary would look like using our hourly to salary calculator before you decide.