Key Takeaways
- Non-exempt workers must get 1.5x their regular rate for every hour over 40 in a workweek.
- The 2026 federal exempt salary threshold is $684/week ($35,568/year) after the 2024 rule was vacated.
- A salary alone doesn't make you exempt — you must also pass a job-duties test.
- 'No Tax on Overtime' is a separate tax deduction; it doesn't change what your employer owes you.
Overtime pay in the United States is governed by the Fair Labor Standards Act (FLSA), and the core rule hasn’t changed in decades: covered, non-exempt employees must be paid time-and-a-half for every hour worked over 40 in a workweek. What has changed for 2026 is the salary level that determines whether an employee is exempt from that rule in the first place — and, separately, a new federal tax deduction for overtime pay that didn’t exist a few years ago.
The Federal Overtime Rule: The Basics
The FLSA covers more than 130 million workers. Unless you’re exempt, your employer must pay you overtime for hours worked over 40 in a workweek at a rate of at least 1.5 times your regular rate of pay. A few core rules that trip people up:
- No overtime hour limit. The FLSA doesn’t cap how many hours an employee 16 or older can be required to work in a week — it only requires the premium pay once you cross 40 hours.
- The workweek is fixed. Your employer defines a recurring 168-hour (seven-day) workweek. It doesn’t have to match the calendar week, but hours can’t be averaged across two or more weeks to avoid paying overtime.
- Overtime can’t be waived. An agreement that “only 40 hours counts as working time,” or an employer announcement that “no overtime will be paid unless pre-authorized,” does not eliminate your right to be paid for overtime hours you actually worked.
- Overtime pay must exceed minimum wage. Because it’s calculated as 1.5x your regular rate, overtime pay is always higher than whatever the applicable federal or state minimum wage requires.
Who’s Exempt From Overtime in 2026
The most common exemption — the “white collar” exemption for executive, administrative, and professional employees — requires both a duties test and a minimum salary. For 2026, that minimum salary is:
| Threshold | 2026 Amount |
|---|---|
| Standard salary level (EAP exemption) | $684/week ($35,568/year) |
| Highly compensated employee (HCE) total compensation | $107,432/year (including at least $684/week salary) |
| Special rate — Puerto Rico, Guam, USVI, N. Mariana Islands | $455/week ($23,660/year) |
| Special rate — American Samoa | $380/week ($19,760/year) |
| Computer employees paid hourly | $27.63/hour |
Source: U.S. Department of Labor, Wage and Hour Division — Earnings Thresholds.
These figures are lower than many employers expected. A 2024 DOL rule would have raised the standard threshold to $1,128/week by 2025, but a federal court in the Eastern District of Texas vacated that rule in November 2024. On May 14, 2026, the DOL published a technical amendment formally restoring the 2019 salary levels shown above, which is what’s currently in effect.
Doctors, lawyers, teachers, and outside sales employees are exempt from the salary threshold entirely — they qualify for the EAP exemption based on job duties alone, regardless of salary.
Subscribe or follow us for updates if the DOL proposes a new salary threshold.
How “No Tax on Overtime” Fits In
Separately from the FLSA pay rules above, the 2025 tax law created a federal income tax deduction for qualifying overtime pay — informally called “No Tax on Overtime.” This is a tax benefit, not a change to the FLSA’s overtime pay requirements: your employer still must pay you 1.5x your regular rate for overtime hours under the rules above, and the tax deduction is a separate calculation on your return. For the income limits, deduction caps, and worked examples, see our full guide: 2026–2027 No Tax on Overtime: Who Qualifies, How to Calculate Your Deduction.
Two Examples: Exempt vs. Non-Exempt
Priya is a marketing coordinator earning $650/week ($33,800/year) and regularly works 45 hours. Because $650/week is below the $684 exemption threshold, she’s non-exempt regardless of her job duties — her employer owes her overtime for the 5 hours over 40, at 1.5x her regular hourly rate.
Marcus is a shift supervisor earning $50,000/year ($961.54/week) who manages two or more employees and has hiring/firing authority. He’s above the $684/week threshold and meets the executive duties test, so he’s likely exempt from overtime — his employer isn’t required to pay him extra for weeks over 40 hours.
Common Issues to Watch Out For
- Assuming a salary automatically means exempt. Being paid a salary isn’t enough — you must also earn at least $684/week AND meet a duties test (executive, administrative, or professional responsibilities) to be exempt.
- Confusing state and federal thresholds. Many states set their own, often higher, salary thresholds and duties tests for overtime exemption. When state law is more protective than federal law, the state rule applies — the same is true of other wage protections, from minimum wage to workers’ compensation benefits, which also vary widely by state.
- Averaging hours across weeks. Working 30 hours one week and 50 the next doesn’t average out to no overtime owed — each workweek is calculated separately.
- Mixing up FLSA overtime pay with the overtime tax deduction. Getting paid time-and-a-half (FLSA) and deducting overtime pay from your taxable income (No Tax on Overtime) are two entirely different things with different eligibility rules.
- Misclassifying computer professionals. Computer employees have a separate, specific salary or hourly threshold ($27.63/hour) — don’t assume general office workers in tech-adjacent roles qualify for this exemption.
Looking Ahead: 2027 Outlook
The DOL has indicated it plans to review the overtime salary threshold again through the normal rulemaking process, which typically takes a year or more from proposal to final rule. Given the 2024 rule’s fate in court, any future increase is likely to face legal challenges if it’s set well above wage growth. For now, the $684/week threshold restored in May 2026 is the operative federal rule, and there’s no confirmed timeline for a change in 2027. We’ll update this page if the DOL issues a new proposed rule.
