Does District of Columbia tax overtime pay?
Yes. District of Columbia taxes overtime pay as ordinary wage income. The federal OBBBA overtime deduction lowers your federal taxable income, but District of Columbia does not conform, so the state still taxes the overtime premium. The District of Columbia taxes overtime pay as ordinary wage income at rates up to 10.75% for income over $1 million. The DC Council passed B26-0457 to decouple from the federal OBBBA tips and overtime deductions, so the federal deduction does not apply on DC returns and overtime remains fully taxable.
Federal rule vs District of Columbia rule
| Layer | 2026 treatment of overtime premium |
|---|---|
| Federal | Up to $12,500 single / $25,000 MFJ of FLSA half-time premium deducted from taxable income, phasing out at $150k/$300k MAGI. 2025–2028. |
| District of Columbia | Graduated rates topping out at 10.75% on income over $1 million |
| Result for you | The District of Columbia taxes overtime pay as ordinary wage income at rates up to 10.75% for income over $1 million. The DC Council passed B26-0457 to decouple from the federal OBBBA tips and overtime deductions, so the federal deduction does not apply on DC returns and overtime remains fully taxable. |
How state overtime taxation works
Most states start from federal AGI and add back or subtract state-specific adjustments. The federal OBBBA overtime deduction lives in federal taxable income only, so a state that starts from federal AGI still taxes the overtime unless it conforms to the deduction or passes its own exemption. Three groups result: the nine no-income-tax states never taxed overtime at all; a set of states that auto-coupled or legislated conformity exclude it for 2026; the rest, including large non-conforming states like California and New York, tax overtime as ordinary wages.
Every state, one table
All 50 states and DC. Tap any state.
| State | Taxes overtime? | Top 2026 rate |
|---|---|---|
| Alabama | Yes | 5.00% |
| Alaska | No (no income tax) | n/a |
| Arizona | Yes | 2.5% |
| Arkansas | Yes | 3.9% |
| California | Yes | 13.3% |
| Colorado | Yes | 4.40% |
| Connecticut | Yes | 6.99% |
| Delaware | Yes | 6.60% |
| Florida | No (no income tax) | n/a |
| Georgia | Yes | 5.19% |
| Hawaii | Yes | 11% |
| Idaho | No (conforms) | 5.3% |
| Illinois | Yes | 4.95% |
| Indiana | Yes | 2.95% |
| Iowa | No (conforms) | 3.8% |
| Kansas | Yes | 5.58% |
| Kentucky | Yes | 3.50% |
| Louisiana | Yes | 3.00% |
| Maine | Yes | 7.15% |
| Maryland | Yes | 6.25% |
| Massachusetts | Yes | 9.0% |
| Michigan | No (conforms) | 4.25% |
| Minnesota | Yes | 9.85% |
| Mississippi | Yes | 4.00% |
| Missouri | Yes | 4.7% |
| Montana | No (conforms) | 5.65% |
| Nebraska | Yes | 4.55% |
| Nevada | No (no income tax) | n/a |
| New Hampshire | No (no income tax) | n/a |
| New Jersey | Yes | 10.75% |
| New Mexico | Yes | 5.9% |
| New York | Yes | 10.9% |
| North Carolina | Yes | 3.99% |
| North Dakota | No (conforms) | 2.5% |
| Ohio | Yes | 2.75% |
| Oklahoma | Yes | 4.50% |
| Oregon | No (conforms) | 9.9% |
| Pennsylvania | Yes | 3.07% |
| Rhode Island | Yes | 5.99% |
| South Carolina | No (conforms) | 6.00% |
| South Dakota | No (no income tax) | n/a |
| Tennessee | No (no income tax) | n/a |
| Texas | No (no income tax) | n/a |
| Utah | Yes | 4.45% |
| Vermont | Yes | 8.75% |
| Virginia | Yes | 5.75% |
| Washington | No (no income tax) | n/a |
| West Virginia | Yes | 4.82% |
| Wisconsin | Yes | 7.65% |
| Wyoming | No (no income tax) | n/a |
Common questions
Does District of Columbia tax overtime pay in 2026?
Yes. District of Columbia taxes overtime pay as ordinary wage income. The federal OBBBA overtime deduction lowers your federal taxable income, but District of Columbia does not conform, so the state still taxes the overtime premium. The District of Columbia taxes overtime pay as ordinary wage income at rates up to 10.75% for income over $1 million. The DC Council passed B26-0457 to decouple from the federal OBBBA tips and overtime deductions, so the federal deduction does not apply on DC returns and overtime remains fully taxable.
Why doesn't the federal overtime deduction always help on my District of Columbia return?
The federal deduction applies to federal taxable income only. States that start from federal AGI and do not conform still tax the overtime premium. The District of Columbia taxes overtime pay as ordinary wage income at rates up to 10.75% for income over $1 million. The DC Council passed B26-0457 to decouple from the federal OBBBA tips and overtime deductions, so the federal deduction does not apply on DC returns and overtime remains fully taxable.
What federal overtime deduction applies in District of Columbia?
Up to $12,500 single / $25,000 MFJ of the FLSA half-time premium, 2025–2028, phasing out at $150k/$300k MAGI. See the overtime calculator.
Is the state rate the only thing that matters?
No. State tax is computed on wages after federal AGI, so the state layer sits on top of your federal return. Local income taxes (New York City, Yonkers, Maryland counties) and state-specific addbacks can change the effective state tax on your overtime.
Related calculators
Comparing states? See which states tax overtime pay across all 50 states and DC.
Sourced to DC Office of Tax and Revenue, DC Individual and Fiduciary Income Tax Rates (10.75% over $1 million), ITEP, Linking to Tipped and Overtime Income Deductions Would Worsen State Shortfalls (Dec 8, 2025). Verified October 1, 2026, pending CPA sign-off.