How Much Is Overtime Taxed in Florida: FICA and the Federal Deduction

In Florida, overtime is taxed only at the federal level: there is no state or local income tax on any wages. Federal income tax applies to your overtime at your ordinary marginal bracket, but a new federal deduction in effect through 2028 lets most workers write off the premium portion (the “half” in time-and-a-half), and Social Security and Medicare take a flat 7.65% off the top. So the honest answer to how much is overtime taxed in Florida is: usually less than your paycheck suggests, because the withholding on that check is almost always higher than the tax you actually owe.

Florida Takes Nothing

Florida imposes no personal income tax, and counties and cities are barred from imposing one either. Every type of compensation is covered: regular wages, overtime, bonuses, commissions. The only income-based deductions on a Florida paycheck come from the federal government. A worker in a high-tax state can face a combined marginal rate above 40% on overtime; in Florida, the entire income tax burden is federal.

The Federal Overtime Deduction Through 2028

The One, Big, Beautiful Bill Act, signed on July 4, 2025, created an above-the-line deduction for qualified overtime compensation for tax years 2025 through 2028.¹ It is not a full exemption. You deduct only the premium portion of overtime pay: the amount above your regular hourly rate.

If your regular rate is $25 and you earn $37.50 for an overtime hour, only $12.50 of that hour is deductible. The other $25 remains fully taxable.²

The rules that decide whether you can use it:

Annual cap of $12,500 per return, or $25,000 for married couples filing jointly.³
The deduction begins phasing out when modified adjusted gross income exceeds $150,000 for most filers, or $300,000 for joint filers.³
Only overtime required under the Fair Labor Standards Act qualifies. Overtime an employer pays voluntarily, or under a union contract to an FLSA-exempt worker, does not.²
You need a Social Security number valid for employment.
Married workers must file jointly to claim it.²

Starting with tax year 2026, employers must separately report qualified overtime compensation on your W-2.² The deduction is available whether you itemize or take the standard deduction.

FICA: The One Unavoidable Cut

The overtime deduction does not touch Social Security or Medicare. Every dollar of overtime is subject to FICA at the same rates as regular wages:

Social Security at 6.2% on earnings up to $184,500 in 2026. Once your cumulative wages hit that ceiling, the deduction stops for the rest of the year.⁴
Medicare at 1.45% on all earnings with no cap.⁵
An Additional Medicare Tax of 0.9% on wages above $200,000 for most filers, or $250,000 for married couples filing jointly.⁶

For most Florida workers, FICA adds a flat 7.65% to every overtime dollar. That rate is unavoidable, and the overtime deduction does not offset it.

How Federal Brackets Actually Apply to Overtime

Overtime is not taxed at some special punitive rate. It gets added to your other income for the year, and the total runs through the progressive federal brackets. For 2026:⁷

10% up to $12,400 (single) or $24,800 (joint)
12% to $50,400 (single) or $100,800 (joint)
22% to $105,700 (single) or $211,400 (joint)
24% to $201,775 (single) or $403,550 (joint)
32% to $256,225 (single) or $512,450 (joint)
35% to $640,600 (single) or $768,700 (joint)
37% above those figures

The standard deduction for 2026 is $16,100 for single filers and $32,200 for joint filers, subtracted before any of these rates apply.⁷ The overtime deduction stacks on top of it.

Overtime that pushes you into a higher bracket only taxes the dollars above the threshold at the higher rate. Getting a promotion into a new bracket never makes your total take-home pay go down.

Why the Paycheck Looks Smaller Than the Tax

Even with the deduction, an overtime paycheck looks heavily taxed. The reason is withholding. The IRS classifies overtime as a “supplemental wage,” and employers have two ways to withhold on it.⁸

Under the flat percentage method, employers withhold a flat 22% on the overtime portion regardless of your W-4 or your actual bracket. For supplemental wages above $1 million in a calendar year, that rate jumps to 37%.⁸ Under the aggregate method, the employer adds the overtime to your regular pay for the period and withholds as if that combined amount were your normal check, projecting the bump forward as if you earned it every period and pushing withholding into a higher bracket.

Both methods usually overshoot. 22% is above the marginal rate of most workers who earn under six figures. The aggregate method treats a one-time bump as permanent salary. The money isn’t gone. It comes back as a refund when you file.

A Worked Example

Consider a single Florida worker earning $50,000 a year who works 150 hours of overtime in 2026. At a regular rate of $24.04 an hour, the overtime rate is $36.06, producing $5,409 in total overtime pay. The premium portion (the “half”) is $1,803.

Gross income: $55,409
Overtime deduction: $1,803, well under the $12,500 cap
Standard deduction: $16,100
Taxable income: $37,506
Federal income tax: roughly $4,273 (10% on the first $12,400, 12% on the rest)
FICA: roughly $4,239 (7.65% of $55,409)
State and local income tax: $0
Total tax: about $8,512, or 15.4% of gross income

Compare that to the paycheck. If the employer used the flat 22% supplemental method, it withheld about $1,190 in federal income tax on the $5,409 of overtime alone. The actual federal income tax the overtime added was closer to $649 after the deduction. The rest comes back as a refund.

Fixing Over-Withholding on Your W-4

If you regularly work overtime and your employer uses the flat 22% method, you are probably having too much withheld, especially with the new deduction reducing your actual liability. Form W-4 Step 4(b) lets you enter deductions beyond the standard deduction, which lowers the amount withheld each pay period.⁹ Entering an estimate of your annual qualifying overtime premium there brings withholding closer to what you actually owe.

If your overtime hours are unpredictable, leaving the W-4 alone and collecting the refund is safer. Underwithholding can trigger a penalty, and a few months of slightly larger checks rarely justify that risk.

Only FLSA-Required Overtime Qualifies for the Deduction

The federal deduction covers only overtime the FLSA requires: pay at one-and-a-half times your regular rate for hours over 40 in a workweek.¹⁰ Workers who are FLSA-exempt (many salaried executive, administrative, and professional employees earning above $684 per week and meeting a duties test) do not qualify, even if their employer voluntarily pays a time-and-a-half premium.¹¹ The premium still gets paid; it just does not reduce federal income tax under the new deduction. FICA and ordinary income tax still apply to it in full.

1
Internal Revenue Service. One, Big, Beautiful Bill Act: Tax Deductions for Working Americans and Seniors
2
Internal Revenue Service. Questions and Answers About the New Deduction for Qualified Overtime Compensation
3
Internal Revenue Service. One, Big, Beautiful Bill Provisions – Individuals and Workers
4
Social Security Administration. Contribution and Benefit Base
5
Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates
6
Internal Revenue Service. Topic No. 560, Additional Medicare Tax
7
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill
8
Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide
9
Internal Revenue Service. Employee’s Withholding Certificate
10
Office of the Law Revision Counsel. 29 U.S. Code 207 – Maximum Hours
11
U.S. Department of Labor. Earnings Thresholds for the Executive, Administrative, and Professional Exemption