Does Idaho tax overtime pay?
Yes. Idaho conforms to the federal OBBBA overtime deduction for 2026, so qualified overtime premium is excluded from Idaho taxable income too. Idaho taxes wage income at its flat 5.3% rate, but the state starts from federal taxable income and automatically couples to federal deductions, including the new federal overtime deduction. Eligible workers can subtract qualified overtime pay on the Idaho return just as they do federally, through 2028.
Federal rule vs Idaho 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. |
| Idaho | Flat 5.3% for all taxable income (reduced from 5.695% by HB 40, effective 2026) |
| Result for you | Idaho taxes wage income at its flat 5.3% rate, but the state starts from federal taxable income and automatically couples to federal deductions, including the new federal overtime deduction. Eligible workers can subtract qualified overtime pay on the Idaho return just as they do federally, through 2028. |
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% |
| District of Columbia | Yes | 10.75% |
| Florida | No (no income tax) | n/a |
| Georgia | Yes | 5.19% |
| Hawaii | Yes | 11% |
| 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 Idaho tax overtime pay in 2026?
Yes. Idaho conforms to the federal OBBBA overtime deduction for 2026, so qualified overtime premium is excluded from Idaho taxable income too. Idaho taxes wage income at its flat 5.3% rate, but the state starts from federal taxable income and automatically couples to federal deductions, including the new federal overtime deduction. Eligible workers can subtract qualified overtime pay on the Idaho return just as they do federally, through 2028.
Why doesn't the federal overtime deduction always help on my Idaho 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. Idaho taxes wage income at its flat 5.3% rate, but the state starts from federal taxable income and automatically couples to federal deductions, including the new federal overtime deduction. Eligible workers can subtract qualified overtime pay on the Idaho return just as they do federally, through 2028.
What federal overtime deduction applies in Idaho?
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 Idaho State Tax Commission - Individual Income Tax, ITEP: Tips and Overtime Income Tax Deduction State Budgets. Verified October 1, 2026, pending CPA sign-off.