Overtime pay in California is taxed as ordinary income at the same rates as your regular wages, but the combined withholding on an overtime check usually runs between 36% and 38%. That covers California state income tax, federal income tax, Social Security, Medicare, and California’s State Disability Insurance. If you’re wondering how much overtime is taxed in California, the short answer is that no special penalty rate applies to overtime itself; the pinch you feel comes from flat supplemental withholding rates that payroll systems apply to overtime, which often withhold more than you actually owe by year’s end.
The Five Deductions That Hit an Overtime Check
Five separate withholdings come out of overtime pay in California. Each is calculated on the overtime dollars the same way it’s calculated on regular wages, but two of them use flat supplemental rates that tend to overshoot.
California State Income Tax: 6.6% Flat Rate on Overtime
California treats overtime as “supplemental wages” under the Unemployment Insurance Code.1California Legislative Information. California Unemployment Insurance Code 13020 The Employment Development Department lets employers apply a flat withholding rate rather than run each overtime dollar through the regular tax tables. For overtime, commissions, and vacation pay, that rate is 6.6%. A different, higher rate of 10.23% applies only to bonuses and stock options.2California Employment Development Department. Information Sheet – Personal Income Tax Withholding A lot of online guides confuse these two rates. If your employer uses the flat-rate method, California income tax on the overtime portion of your check should be 6.6%, not 10.23%.
Your actual California tax owed depends on where your total annual income lands in the state’s progressive brackets, which run from 1% to 13.3%.3CA.gov. California Tax Rate Schedules Because California gross income includes all compensation for personal services, overtime stacks onto your regular pay for annual tax purposes.4California Legislative Information. California Revenue and Taxation Code 17071
Federal Income Tax: 22% Flat Supplemental Rate
The IRS also treats overtime as ordinary income. For withholding, the federal supplemental wage rate is a flat 22%. If your supplemental wages from one employer exceed $1 million in a calendar year, the rate on the excess jumps to 37%.5Internal Revenue Service. Publication 15 (2026), (Circular E), Employers Tax Guide
Federal tax rates for 2026 run from 10% to 37%. For single filers, 22% applies to income between $50,400 and $105,700, 24% applies between $105,700 and $201,775, and 32% applies between $201,775 and $256,225.6Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 For workers whose real bracket is 10% or 12%, the flat 22% supplemental withholding pulls out more than the eventual tax bill, and the difference comes back as a refund.
Social Security: 6.2%
Social Security tax comes out at 6.2% of wages, including overtime, up to the annual wage base. For 2026, that base is $184,500. Once your combined earnings pass the base for the year, Social Security stops for the rest of the year.7Social Security Administration. Contribution and Benefit Base
Medicare: 1.45% (Plus 0.9% Above $200,000)
Medicare tax is 1.45% on all wages with no cap. An Additional Medicare Tax of 0.9% kicks in once your wages pass $200,000 for a single filer or $250,000 for married filing jointly, bringing the combined Medicare rate to 2.35% on the amount above those thresholds.8Internal Revenue Service. Topic No. 560, Additional Medicare Tax
California State Disability Insurance: 1.3%
California employees pay 1.3% of every wage dollar into State Disability Insurance in 2026. There is no wage ceiling, so SDI applies to overtime the same way it applies to regular pay, at every income level.9California Employment Development Department. Contribution Rates and Benefit Amounts
What the Numbers Look Like on $500 of Overtime
Say you pick up $500 of overtime in one pay period, and your employer uses the flat-rate method for supplemental wages. Here’s what typically comes out:
- California state income tax at 6.6%: $33.00
- Federal income tax at 22%: $110.00
- Social Security at 6.2%: $31.00
- Medicare at 1.45%: $7.25
- California SDI at 1.3%: $6.50
Total withholding runs about $187.75, and roughly $312.25 lands in your account. The combined bite is around 37.6%.
Why Withholding Often Runs Higher Than the Actual Tax
Employers generally use one of two methods to figure withholding on overtime, and the choice affects your paycheck.
With the flat-rate method, the employer separates overtime from regular wages and applies 6.6% for California and 22% for federal directly to the overtime portion, then adds Social Security, Medicare, and SDI. It’s straightforward and predictable.
With the aggregate method, the employer lumps the overtime in with your regular wages and calculates withholding as if you earned that combined total every pay period. Because the payroll system treats that inflated figure as your ongoing income, it applies withholding from a higher projected bracket. That often pulls out more than the flat-rate method would.
Either way, the withholding you see on your paycheck is an estimate, not your final tax. When you file your federal return and California Form 540, your actual liability is calculated on your total annual income, deductions, and credits. If withholding exceeded what you owe, the overage comes back as a refund. Workers who pick up sporadic overtime, or whose employer uses the aggregate method, often get money back at tax time for exactly this reason.
Adjusting Your Withholding If Overtime Is Regular
If overtime is a steady part of your schedule and you consistently get large refunds, you can reshape your withholding so more of the money stays in each paycheck.
For federal withholding, file an updated Form W-4 with your employer. Step 3 handles credits for dependents, Step 4(b) accounts for deductions beyond the standard amount, and Step 4(c) lets you add extra withholding per pay period if you’d rather have a bigger refund. The IRS Tax Withholding Estimator at irs.gov walks through the math based on your income and filing status.5Internal Revenue Service. Publication 15 (2026), (Circular E), Employers Tax Guide
For California, file a Form DE 4 (Employee’s Withholding Allowance Certificate). The DE 4 adjusts your California allowances and can add a flat extra amount per pay period. If you never submit one, your employer withholds at single filing status with zero allowances, which produces the highest possible California withholding.10California Employment Development Department. Employees Withholding Allowance Certificate DE 4 Either form can be updated any time; there’s no limit on how often you can file a new one.