Overtime pay · state by state
Which states tax overtime pay in 2026?
The federal OBBBA overtime deduction removes qualified overtime premium from your federal taxable income, but your state may still tax it. Every state handles this one of three ways: no income tax at all, conformity with the federal deduction, or taxation as ordinary wages. Here is where each state stands, verified against 2026 law.
States with no income tax
In these states the question answers itself: wages, overtime or not, are never taxed at the state level. The federal deduction is the only one that matters, and it applies on the federal return.
States that conform to the federal deduction
These states use their rolling federal conformity to adopt the OBBBA overtime deduction, so qualified overtime premium drops out of state taxable income for 2026 as well.
States that tax overtime as ordinary wages
In the rest of the country, overtime premium is taxed like any other wage. The federal deduction still lowers your federal bill, but your state return is unaffected, and the top rate below is what your marginal overtime hour costs at the state level.
| State | Top rate | Details |
|---|---|---|
| Alabama | 5.00% | Graduated rates of 2%, 4%, and 5%; the top 5.00% rate applies to taxable income over $6,000 for joint filers |
| Arizona | 2.5% | Flat 2.5% for all taxable income |
| Arkansas | 3.9% | Top rate 3.9% after 2024-2025 rate cuts |
| California | 13.3% | Top rate 13.3% above $1 million; most filers pay far less |
| Colorado | 4.40% | Flat 4.40% for all taxable income |
| Connecticut | 6.99% | Graduated rates from 2.0% to 6.99% on wages |
| Delaware | 6.60% | Graduated rates from 2.2% to 6.60%; the 6.60% rate applies to taxable income over $60,000 |
| District of Columbia | 10.75% | Graduated rates topping out at 10.75% on income over $1 million |
| Georgia | 5.19% | Flat 5.19% on all taxable income for 2026 |
| Hawaii | 11% | Top rate 11% on income above roughly $200,000 (single) |
| Illinois | 4.95% | Flat 4.95% on wages (2026) |
| Indiana | 2.95% | Flat 2.95% on wages as of January 1, 2026, scheduled to drop to 2.9% in 2027 |
| Kansas | 5.58% | Two brackets, 5.2% and 5.58% (2026) |
| Kentucky | 3.50% | Flat 3.50% on all taxable income for 2026 |
| Louisiana | 3.00% | Flat 3.00% on all taxable income for 2026 under the 2025 flat tax overhaul |
| Maine | 7.15% | Graduated rates from 5.8% to 7.15% on wages |
| Maryland | 6.25% | Graduated rates from 2% to 5.75%, plus a 6.25% top bracket on income over $500,000 (single) added in 2025 |
| Massachusetts | 9.0% | Flat 5.0% on wages plus 4% surtax on income over $1 million (9% top) |
| Minnesota | 9.85% | Graduated, 5.35% to 9.85% top rate (2026) |
| Mississippi | 4.00% | Flat 4.00% on all taxable income for 2026 (phased down from 4.4%) |
| Missouri | 4.7% | Graduated top rate of 4.7% on wages (2026) |
| Nebraska | 4.55% | Top rate fell from 5.2% to 4.55% on January 1, 2026, continuing a phase-down toward 3.99% by 2027 |
| New Jersey | 10.75% | Graduated rates topping out at 10.75% on income over $1 million |
| New Mexico | 5.9% | Top rate 5.9% on income above roughly $210,000 (single) |
| New York | 10.9% | Graduated rates topping out at 10.9% on income over $25 million |
| North Carolina | 3.99% | Flat 3.99% on all taxable income for 2026 |
| Ohio | 2.75% | Flat 2.75% on nonbusiness income over $26,050 as of January 1, 2026 (2025 law HB 96) |
| Oklahoma | 4.50% | Graduated rates of 2.5%, 3.5%, and 4.5%; the top 4.50% rate applies to taxable income over $7,200 |
| Pennsylvania | 3.07% | Flat 3.07% on all wage income |
| Rhode Island | 5.99% | Graduated rates from 3.75% to 5.99% on wages |
| Utah | 4.45% | Flat 4.45% for all taxable income (lowered from 4.55% retroactive to January 1, 2026) |
| Vermont | 8.75% | Graduated rates topping out at 8.75% on wages |
| Virginia | 5.75% | Graduated rates of 2%, 3%, 5%, and 5.75%; the top 5.75% rate applies to taxable income over $17,000 (single) |
| West Virginia | 4.82% | Graduated rates from 2.22% to 4.82%; the 4.82% rate applies to taxable income over $60,000 |
| Wisconsin | 7.65% | Graduated top rate of 7.65% on wages (2026) |
Estimate the federal side
Wherever you live, the federal overtime deduction decides what your overtime is worth on your 1040. Run your numbers in the overtime tax calculator.
Compiled from state revenue department notices and Tax Foundation 2026 state rate data. Verified October 1, 2026.