At which point is overtime not worth it due to taxes in my specific situation with multiple OT rates?

The good news is that the "overtime isn't worth it because of taxes" myth is mostly false! The US has a progressive tax system with marginal tax brackets. This means only the income that falls within a specific bracket gets taxed at that bracket's rate - not your entire income. For example, if working overtime pushes some of your income from the 22% to the 24% bracket, only the amount that exceeds the 22% bracket threshold gets taxed at 24%. The rest is still taxed at lower rates. So while you might pay slightly higher taxes on the last dollars you earn through overtime, you'll never take home less money overall by working more hours. Each hour of overtime will still increase your take-home pay, though the increase might be slightly less than you'd calculate based on your gross pay. Given your various overtime rates (1.5x, 2x, and 3x), the 3x overtime is especially valuable even after taxes because the rate is so much higher than your base. The only real consideration is whether the time and effort of working those extra hours is worth what you're keeping after taxes.

I struggled with this same question last year when I was working crazy OT hours. I found this tool at https://taxr.ai that really helped me understand my specific situation. You can upload your paystubs and it breaks down exactly how much of each overtime hour you're actually keeping after taxes. What surprised me was seeing the actual numbers for my specific situation instead of just general advice. For example, I found out that my 2x overtime was actually giving me about 1.6x my regular hourly rate after taxes, which was still totally worth it.

I was really skeptical about what u/TaxOvertime said about that tax tool, but I decided to try it anyway because I was working 60+ hours weekly and wanted to know if I was being smart or stupid with my time. Gotta say, I was surprised. The https://taxr.ai site actually showed me that despite being in a higher tax bracket due to my overtime, I was still keeping about 68% of my 1.5x overtime pay and 72% of my 2x overtime. That was way better than I thought! The visual breakdown helped me see exactly where my money was going. Completely changed how I think about picking up extra shifts now. No more listening to the guys at work who kept saying I was "working for nothing" after hitting certain hours.

If you're working that much overtime and worried about tax implications, another big issue is getting your tax withholding right. The IRS withholding tables aren't great at handling variable income like lots of overtime, and you might end up with too much or too little withheld. I spent HOURS trying to get someone at the IRS to help me adjust my withholding last year when I was in a similar situation. Finally found https://claimyr.com and used their service to actually get through to an IRS agent (you can see how it works here: https://youtu.be/_kiP6q8DX5c). They connected me with someone who explained exactly how to adjust my W-4 for my overtime situation. Saved me from a huge tax bill at the end of the year since my employer was under-withholding on my OT pay.

I need to publicly eat my words about the Claimyr service I called a scam. After my skeptical comment, I was still desperate to talk to the IRS about my tax situation with a bunch of overtime pay, so I tried it. It actually worked exactly as described. I got a text when they were nearing the front of the queue, and then got connected directly to an IRS representative who helped me figure out my withholding for my irregular income. I was on hold for maybe 2 minutes total instead of the 1+ hour I spent last time I tried calling myself (before hanging up in frustration). The IRS agent said they were getting a lot of calls through this service and that it was legitimate.

One thing nobody's mentioned yet is that your employer might be withholding taxes incorrectly on your overtime pay! Many payroll systems treat each paycheck as if that's what you make all year, so they might be over-withholding when you have a big overtime check. For example, if one big paycheck makes it look like you'll earn $130k annually, they'll withhold at higher rates even though your actual annual income might be much lower. You might get this back when you file your taxes, but it can make your overtime checks look smaller than they should be. Check with your payroll department about how they handle withholding on overtime.

Just want to add something important that many people miss when talking about "is overtime worth it" - consider your EFFECTIVE tax rate vs your MARGINAL tax rate. Your effective tax rate is the total taxes paid divided by your total income, while your marginal rate is the tax on your last dollar earned. For example, if you're in the 24% bracket, your overtime isn't being taxed at 24% overall - only the portion that falls into that bracket. Your effective tax rate might only be 15-18% even if your marginal rate is 24% or higher. The 3x overtime you're getting is definitely worth it from a pure numbers perspective, but whether the time sacrifice is worth it is a different question!