The basic formula
For a standard time-and-a-half arrangement, multiply the regular rate by 0.5 and by FLSA overtime hours. At $20 per hour and 10 overtime hours, that is $20 × 0.5 × 10, or $100 of potentially qualified compensation.
Qualified overtime calculation
Overtime premium vs. total overtime pay
A time-and-a-half paycheck contains straight-time pay for the overtime hours plus an extra premium. The federal deduction generally reaches only the required premium, not the full amount paid for those hours.
These examples assume a stable $20 regular rate and the standard FLSA rule after 40 hours. Bonuses, multiple rates, piece rates, salary arrangements, alternative FLSA rules, and credits can change the regular-rate calculation.
| 50-hour week at $20 regular rate | Amount | Deduction treatment |
|---|---|---|
| 40 regular hours | $800 | Ordinary straight-time wages; not qualified overtime. |
| Straight-time portion for 10 overtime hours | $200 | Pay at the regular rate; not the qualifying premium. |
| Required extra half-time premium | $100 | Potential qualified overtime compensation. |
| Total weekly pay at time-and-a-half | $1,100 | The potential deduction is $100, not $300 or $1,100. |
Double-time example
If the same employee receives double time for the 10 hours, total overtime pay is $400. The FLSA-required premium remains $100. The additional premium paid by employer policy is not converted into qualified overtime compensation.
The regular rate can differ
The FLSA regular rate can include more than an hourly base rate. Certain bonuses or other remuneration may affect it, while statutory exclusions may not. Use the employer's supported FLSA calculation and the 2026 reported amount for a return claim.
Why pay-stub labels can mislead
A pay stub may label the entire $300 paid for ten time-and-a-half hours as "OT pay." That label combines $200 of straight-time value with the $100 premium. The qualified overtime deduction calculator asks for the regular rate and overtime hours so it can isolate the half-time premium for planning.
State daily overtime, weekend premiums, holiday pay, contract premiums, and employer incentives can produce legitimate extra pay without producing qualified federal overtime compensation. The key question is how much was required by the applicable FLSA section 7 rule.
Sources: IRS FS-2026-13, DOL Fact Sheet #23, 29 CFR 778.109, and 26 USC Section 225. Last reviewed 2026-08-16.