Time-and-a-half pay is a common expression referring to overtime pay wages. State laws normally require that employers pay hourly workers and nonexempt salary workers overtime pay when they work more than 40 hours in one week. Time-and-a-half is the common minimum pay required. While calculating this amount for your gross income is quite simple, you should also factor in additional deductions that time-and-a-half pay can trigger on your paycheck.
The Good News: Gross Income
Determining the basic hourly wage for overtime work is simple. You just multiply the standard wage times 1.5. For example, if a worker earns $10 per hour for regular hours, you would multiply 10 by 1.5 to arrive at $15 per hour for overtime. If an employee works seven hours of overtime in a particular week at $15 per hour, he makes $105 in overtime pay.
If a laborer makes $14 per hour, his overtime rate is $21 per hour. In a 50-hour week, he earns $560 in regular pay and $210 in overtime pay, for a total of $770 that week, which is $70 more than he would have made without the time-and-a-half pay.
(40 hours x $14) + (10 hours x $21) = $770
The Bad News: Net Income
Earning time-and-a-half pay does increase your income by 50%, but your take-home pay after deductions will seldom be boosted by so much. Depending on your current tax bracket and the state you live in, much of your overtime pay will be taken off your check before you get it.
For example, if a worker earns $20 per hour and is working an extra 8-hour shift each week for time-and-a-half pay, her overtime pay will be $30 per hour. This works out to be $240 extra each week in gross income. However, this also increases her tax bracket, so her deductions will be increased too. With state and federal income taxes, as well as increased employee-paid payroll tax, that extra $240 means her net income, or take-home pay that week will be closer to $144.
If you are budgeting, a good rule of thumb is to estimate about half of your overtime pay will get to you after deductions. Once you get paid, you can use your actual deduction numbers to calculate how much you will get in net income the next time you work extra hours.