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The marginal shift formula
net = gross × (1 − marginal% − 7.65%) − shift costs real rate = net ÷ hours
Extra income lives at the margin: it doesn't get your standard deduction or your low brackets — those are used up by your regular pay. That's not a reason to skip overtime; it's the honest exchange rate for your Saturday, which is worth knowing before agreeing to it.
A worked example
$24 base at time-and-a-half for 8 hours grosses $288. At a 22% marginal rate plus FICA, about $85 goes to taxes; $25 of commute and lunch leaves $178 — a real rate of $22/hour for premium-pay hours. Still decent. Add $60 of Saturday childcare and it's $14.75/hour — below the base rate, and suddenly "no thanks" is a rational answer.
Making overtime worth more
The levers: stack shifts on days you already commute (kills the fixed cost), route the extra pay straight into a traditional 401(k) (the marginal tax vanishes into deferral — effectively earning the gross), and prefer double-time days if your employer offers them, where the same math lands almost twice as well. Check the plain conversion rates on our time and a half calculator.
Frequently asked questions
Is overtime taxed more?
No — same tax rates. It's WITHHELD more aggressively (the payroll system annualizes the big check), which is where the myth comes from, and the extra dollars do land on top of your income at your highest marginal rate. Over-withholding comes back at filing; the marginal rate is real.
How much of overtime pay do I actually keep?
Typically 60–75%: the extra earnings are taxed at your marginal federal rate (commonly 12–24%) plus 7.65% FICA plus state tax. Time-and-a-half at $30 becomes roughly $20–22 in-pocket per hour for a mid-bracket earner.
Why does my extra shift feel like it pays so little?
Because shift costs are fixed: the commute, the parking, sometimes childcare — they eat a bigger share of one extra shift than of your regular week. A $180 gross shift with a $20 commute and $60 of childcare nets very differently than the schedule board implies.
Are there rules about mandatory overtime?
Federal law allows employers to require overtime (with proper pay) for most non-exempt workers; some states and union contracts limit it, and healthcare has specific rules in several states. Declining voluntary extra shifts is generally fine; check your contract for mandatory ones.