FLSA vs. State Overtime Rules

The Fair Labor Standards Act is the federal law that sets the baseline overtime rule for most hourly, non-exempt employees in the country: work more than 40 hours in a single workweek, and every hour past 40 has to be paid at 1.5 times your regular rate. There's no daily limit built into the FLSA itself. You could work a 12-hour day under federal law alone and not trigger any overtime, as long as your total for the week stayed at or under 40 hours.

This 40-hour weekly rule is what the no tax on overtime deduction is built around. When people talk about "qualified overtime" for this deduction, they mean the premium portion of pay tied specifically to FLSA-required hours, not overtime pay in general. Seeno tax on overtime, explainedfor how that premium-only calculation works.

A state is always free to require more overtime pay than the FLSA does. It just can't require less. Most states don't bother writing their own overtime rule at all and just let the federal 40-hour rule apply by default. But 4 states in this build's dataset, California, Alaska, Nevada, and Colorado, go further and require overtime pay based on a single day's hours or a single shift's length, not just the weekly total.

That extra state-mandated overtime is completely legitimate pay and it's fully subject to income tax and payroll tax the same as any other wages. What it isn't, is FLSA overtime. Because the federal deduction is written around the FLSA specifically, overtime that exists only because of a state's daily rule, with no matching weekly-40-hour trigger, sits outside the deduction.

California is the state where this distinction shows up most often, because its overtime rules are the most layered in the country. On top of the standard 40-hour weekly rule, California also requires 1.5 times pay for any hours worked past 8 in a single day, double time past 12 in a single day, and extra pay for the 7th consecutive day worked in a week.

Picture someone who works four 10-hour days and takes the fifth day off. That's 40 hours for the week, so no FLSA overtime at all under the federal rule. But each of those 10-hour days includes 2 hours past California's daily 8-hour mark, so the worker is owed daily overtime under state law even though their weekly total never crossed 40. None of that daily overtime pay is FLSA overtime, so none of it is qualified overtime for the federal deduction, even though it's real overtime pay the worker actually received and it's taxed like any other income.

Now picture a different week: the same worker picks up a fifth 10-hour day. That week totals 50 hours, so 10 hours are FLSA overtime under the federal 40-hour rule and qualify for the deduction. The daily overtime from each individual 10-hour day is layered on top and calculated separately under California's own formula, and that portion still doesn't qualify. A single paycheck can genuinely contain both kinds of overtime side by side, which is exactly why lumping "all my overtime pay" into the calculator overstates the deduction for many California workers. See theCalifornia overtime deduction pagefor the full breakdown and sourcing.

California gets the most attention, but it isn't the only state with a daily overtime trigger.Alaska, Nevada, Colorado all require overtime pay in situations the FLSA alone wouldn't, using their own specific thresholds:

• Alaska: 1.5x regular rate for hours worked beyond 8 in a workday, for employers with 4 or more employees.
• Nevada: 1.5x regular rate for hours worked beyond 8 in a 24-hour period, but only for employees earning less than 1.5x the state minimum wage (as of 2026, minimum wage is $12.00/hr, so the daily rule applies below $18.00/hr).
• Colorado: 1.5x regular rate for hours worked beyond 12 in a single workday.

In every one of these states, the same principle from the California example applies: state-only overtime pay, created by a daily or shift-length rule rather than the 40-hour weekly rule, doesn't count as qualified overtime for the federal deduction, no matter how it's labeled on the pay stub.

Outside of California, Alaska, Nevada, and Colorado, most states either have no overtime statute of their own and simply defer to the FLSA, or they've written their own law to track the same 40-hour weekly threshold. This build has individually confirmed that pattern forTexas, Florida, New York, Ohio, Michigan, Pennsylvania, Illinois, and it's the default assumption for the rest of the country unless a state's own labor department says otherwise.

If you live and work in one of these states, there generally isn't a split to worry about: the overtime pay on your paycheck is FLSA overtime, and the premium portion of it is what counts toward the deduction. Check your own state's page in thestate-by-state guideto confirm, since state overtime law does occasionally change.

Start with your total hours for the week. Anything past 40 is FLSA overtime, full stop, no matter what state you're in. If your state also has a daily rule and you were paid extra for a long day that still kept your week at or under 40 hours total, that extra pay is state overtime, not federal, and it sits outside the deduction.

For most people this split never comes up, because their state's rule and the federal rule are the same thing. If you're in one of the four states above, your pay stub or your payroll department can usually tell you how a specific week's overtime was calculated. Once you know your FLSA-qualifying hours, run the premium portion throughthe no tax on overtime calculatorto estimate the deduction.

This is general information, not tax or legal advice. State overtime rules are sourced from each state's labor department and cited on that state's own page. Confirm your specific situation with your employer's payroll department or a tax professional before filing. Every calculator linked from this page runs entirely in your browser.