Does New York tax overtime pay?
Yes. New York taxes overtime pay as ordinary wage income. The federal OBBBA overtime deduction lowers your federal taxable income, but New York does not conform, so the state still taxes the overtime premium. New York taxes overtime pay as ordinary wage income at rates up to 10.9%. Because New York uses static conformity starting from federal AGI rather than federal taxable income, the federal OBBBA overtime deduction does not carry over to the state return. Governor Hochul has proposed a state-level exemption for overtime (and a larger one for tips) in her 2026 agenda, but it remains a proposal rather than enacted law, so overtime is still fully taxable for now.
Federal rule vs New York 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. |
| New York | Graduated rates topping out at 10.9% on income over $25 million |
| Result for you | New York taxes overtime pay as ordinary wage income at rates up to 10.9%. Because New York uses static conformity starting from federal AGI rather than federal taxable income, the federal OBBBA overtime deduction does not carry over to the state return. Governor Hochul has proposed a state-level exemption for overtime (and a larger one for tips) in her 2026 agenda, but it remains a proposal rather than enacted law, so overtime is still fully taxable for now. |
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% |
| 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% |
| 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 New York tax overtime pay in 2026?
Yes. New York taxes overtime pay as ordinary wage income. The federal OBBBA overtime deduction lowers your federal taxable income, but New York does not conform, so the state still taxes the overtime premium. New York taxes overtime pay as ordinary wage income at rates up to 10.9%. Because New York uses static conformity starting from federal AGI rather than federal taxable income, the federal OBBBA overtime deduction does not carry over to the state return. Governor Hochul has proposed a state-level exemption for overtime (and a larger one for tips) in her 2026 agenda, but it remains a proposal rather than enacted law, so overtime is still fully taxable for now.
Why doesn't the federal overtime deduction always help on my New York 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. New York taxes overtime pay as ordinary wage income at rates up to 10.9%. Because New York uses static conformity starting from federal AGI rather than federal taxable income, the federal OBBBA overtime deduction does not carry over to the state return. Governor Hochul has proposed a state-level exemption for overtime (and a larger one for tips) in her 2026 agenda, but it remains a proposal rather than enacted law, so overtime is still fully taxable for now.
What federal overtime deduction applies in New York?
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 Tax Foundation, 2026 State Tax Competitiveness Index (New York top rate 10.9%), Thomson Reuters Tax, Which states are decoupling from federal tax provisions? (New York static conformity from AGI; 2026 Hochul proposal pending), The Hill, Hochul to put forward no tax on tips proposal in New York (Jan 1, 2026, includes smaller overtime deduction). Verified October 1, 2026, pending CPA sign-off.