For many American workers, overtime is a great way to boost their income. However, the rules surrounding who gets paid extra and how much they should receive can be complicated. With recent updates to federal labor laws in 2025, it’s more important than ever to understand your rights regarding “time-and-a-half.”
Whether you are an hourly worker or a salaried professional, this guide breaks down the legal requirements for overtime pay and how to calculate it accurately.
What is Time-and-a-Half?
“Time-and-a-half” refers to the overtime premium rate required by the Fair Labor Standards Act (FLSA).1 It means that for every hour of overtime worked, an employer must pay the employee their regular hourly rate plus an additional 50% of that rate.2
- Regular Rate: $20/hour3
- Overtime Rate (1.5x): $30/hour4
The 40-Hour Workweek Rule
Under federal law, overtime pay kicks in after a non-exempt employee works more than 40 hours in a single workweek.5
Important Note: A “workweek” is defined as any fixed and regularly recurring period of 168 hours (seven consecutive 24-hour periods).6 It does not have to be Monday through Sunday, but it must remain consistent.7 Employers are not allowed to “average” hours over two weeks.8 For example, if you work 45 hours in Week 1 and 35 hours in Week 2, you are still owed 5 hours of overtime for Week 1.
Who is Eligible for Overtime? (2025 Updates)
Not everyone who works over 40 hours gets overtime.9 Employees are generally divided into two categories:
1. Non-Exempt Employees (Eligible)10
Most hourly workers and many blue-collar or clerical workers are non-exempt. They must be paid time-and-a-half for all hours over 40.11
2. Exempt Employees (Not Eligible)12
Exempt employees are usually salaried professionals, executives, or administrative staff.13 To be exempt, you must pass three tests:
- The Salary Basis Test: You are paid a fixed salary regardless of hours worked.
- The Duties Test: Your job involves high-level professional, executive, or administrative duties.14
- The Salary Threshold Test: As of January 1, 2025, the federal salary threshold for exemption increased to $1,128 per week (equivalent to $58,656 per year).15 If you earn less than this amount, you are generally eligible for overtime even if you are on a salary.
New 2025 Rule: “No Tax on Overtime” (OBBBA)
A major change for 2025-2026 is the introduction of the One Big Beautiful Bill Act (OBBBA).16 Under this new rule, eligible workers may be able to deduct a portion of their “premium” overtime pay (the “half” in time-and-a-half) from their federal income tax, up to certain limits ($12,500 for single filers).17
This means your overtime hours might actually be worth even more in 2026 than in previous years!
State-Specific Overtime Laws
While federal law is the baseline, some states have stricter rules.18 For example:
- California: Requires time-and-a-half for any work over 8 hours in a single day, and double-time for work over 12 hours in a day.19
- Colorado & Nevada: Also have daily overtime triggers.20
If your state has an overtime law that is better for the worker than federal law, the employer must follow the state law.21
How to Calculate Your Overtime
Calculating your overtime is simple if you use a tool like our U.S. States Salary Calculator. But if you want to do the math yourself:
- Find your Regular Rate: (Total Weekly Pay / Total Hours Worked).
- Identify Overtime Hours: (Total Hours – 40).22
- Apply the Premium: (Overtime Hours x Regular Rate x 1.5).23
Example:
If you earn $25 per hour and work 48 hours:
- Regular Pay: 40 hours x $25 = $1,000
- Overtime Pay: 8 hours x ($25 x 1.5) = $300
- Total Gross Pay: $1,300
Conclusion
Understanding overtime laws ensures you are being compensated fairly for your hard work. With the new 2025 salary thresholds and potential tax benefits for overtime pay, now is the perfect time to review your pay stubs.
To see exactly how much your overtime is worth after federal and state taxes, use our U.S. States Salary Calculator today.