How hourly pay becomes a paycheck
Gross pay is the hourly rate times the hours in the pay period. Overtime hours are paid at the overtime multiplier, 1.5 times the regular rate under federal law for hours over 40 in a workweek, and double-time hours at twice the rate. Reported tips are added on top. From that gross, the paycheck loses federal income tax, Social Security, Medicare, state income tax where there is one, and any local tax or state payroll levy.
At $25.00 an hour and 40 hours a week in California, a two-week paycheck is $2,000.00 gross. Federal income tax takes $156.15, Social Security $124.00, Medicare $29.00 and California $55.58, plus State Disability Insurance. That leaves $1,609.27. Paid weekly, the same job gives $804.67 a week. Spread over a full year of 2,080 hours, every hour of work is worth $20.12 after tax.
Overtime, double time and state rules
Five overtime hours a week at $37.50 an hour add $375.00 to each two-week paycheck before tax and $271.68 after it. The share kept is lower than on regular hours because the extra pay is withheld at the paycheck's top rate. Some states require more than the federal weekly rule and pay overtime by the day: Alaska after 8 hours in a day; California after 8 hours in a day (double time after 12); Colorado after 12 hours in a day; Nevada after 8 hours in a day. Use the overtime calculator to check a week of uneven shifts day by day.
What the inputs mean
- Hourly rate: your base rate before any shift differential. Enter a differential as part of the rate if it applies to every hour.
- Hours a week: regular hours only. A part-time schedule of 25 hours at the same rate gives $1,053.51 every two weeks.
- Overtime and double-time hours: average hours a week, in the Adjust section. The calculator applies them to every paycheck.
- Tips: tips reported to your employer each paycheck, cash and card alike.
- Pay frequency, filing status and state: as on the salary paycheck calculator.
Common mistakes
- Multiplying the hourly rate by 2,080 and calling it take-home pay. Tax comes off first; the per-hour figure above is the honest one.
- Counting paid time off twice. Holidays and vacation paid at your rate are already part of a 52-week year.
- Leaving tips out. They change withholding even when the cash is already in your pocket, so a server's check can look small for a reason.
- Expecting the federal overtime deduction on the paycheck. It reduces tax on the return; see the no tax on overtime calculator.
Shift workers paid weekly see the effect of a short week straight away: the calculator assumes the same hours every week, so for a week with fewer hours, change the hours field and read the weekly figure. Salaried staff paid by the hour for extra work can enter their salary as an hourly rate here, too.
Social Security stops for the year once pay reaches $184,500, a level few hourly jobs reach, so for most hourly workers the FICA share stays the same from January to December.
Hourly pay questions
How much is $25.00 an hour after taxes?
At 40 hours a week in California, single and paid every two weeks, $25.00 an hour gives a paycheck of $1,609.27 from $2,000.00 gross. Over the year that is $41,841, or $20.12 for each hour worked. In Florida, with no state income tax, the paycheck is $1,690.85.
Is overtime taxed at a higher rate?
No. Overtime is added to the paycheck and taxed as ordinary pay, but because it raises that paycheck, more of it can fall in a higher withholding bracket. In the example above, five overtime hours a week add $375.00 gross and $271.68 to take-home pay per paycheck.
Are tips taxed on my paycheck?
Tips you report to your employer are wages for income tax, Social Security and Medicare, so they raise withholding even though they never pass through payroll as cash. Reporting $300.00 of tips each paycheck lowers the check itself from $1,609.27 to $1,526.62 once the extra tax is withheld. The federal tips deduction is claimed on the tax return, not taken out of each paycheck.
Sources
Rules checked . How we calculate.