How hourly paychecks are calculated
Gross pay = (hourly rate × regular hours) + (hourly rate × 1.5 × overtime hours) + tips + bonuses
Under the federal Fair Labor Standards Act, non-exempt workers get at least 1.5× their regular rate for hours over 40 in a workweek. A few states go further. California, Alaska, Nevada and Colorado require daily overtime after 8 or 12 hours, and California requires double time after 12 hours in a day.
Example: $20/hour, 40 regular hours plus 10 overtime hours in a week:
- Regular pay: $20 × 40 = $800
- Overtime: $30 × 10 = $300
- Gross pay: $1,100 → take-home about $937.77 in Texas, including a no-tax-on-overtime saving of $12.00 that week.
Weekly take-home pay by hourly wage
40 hours a week, single filer, Texas (no state income tax), weekly pay:
| Hourly wage | Weekly gross | Weekly take-home | Yearly take-home |
|---|---|---|---|
| $15/hour | $600.00 | $524.02 | $27,249 |
| $18/hour | $720.00 | $620.44 | $32,263 |
| $20/hour | $800.00 | $684.72 | $35,606 |
| $25/hour | $1,000.00 | $845.42 | $43,962 |
| $30/hour | $1,200.00 | $1,006.12 | $52,318 |
| $40/hour | $1,600.00 | $1,295.41 | $67,361 |
No tax on overtime and tips for hourly workers
The One Big Beautiful Bill Act created two federal deductions for 2025–2028 that matter most to hourly workers:
- Qualified overtime: the extra half of time-and-a-half pay, up to $12,500 a year ($25,000 joint), phasing out above $150,000 of income ($300,000 joint).
- Qualified tips: up to $25,000 of tips in occupations that customarily receive them, with the same phase-out.
Both reduce federal income tax only. Social Security, Medicare and most state taxes still apply. To see the savings in your paycheck instead of at tax time, enter them on Step 4(b) of a 2026 Form W-4. The calculator above applies them when the boxes in section 5 are checked. For a deeper breakdown, see our guide to no tax on tips and overtime.