Why was my overtime check taxed so much more than my regular paycheck?

The difference you're seeing isn't because overtime is taxed at a higher rate - it's all about how payroll systems typically handle withholding calculations. Here's what's happening: Most payroll systems look at each check individually and calculate withholding as if you'd make that same amount every pay period for the entire year. So when you get an overtime check, the system thinks "wow, this person is suddenly making a lot more money annually" and withholds at a higher rate accordingly. For example, if your normal biweekly check is $2,675, the system calculates withholding assuming an annual income around $69,550. But if your overtime check is $1,485, the system might assume that's your new regular pay rate and extrapolate to a much higher annual income - possibly putting you in a higher projected tax bracket for that single check. The good news is that when you file your taxes, everything gets reconciled based on your actual total income for the year. You're not actually being taxed more on overtime earnings - you're just having more withheld temporarily. Any excess withholding will come back as a refund when you file.

I had the exact same problem and it was driving me crazy until I found taxr.ai (https://taxr.ai). It's this tool that analyzes your paystubs and explains exactly what's happening with your withholdings. I uploaded my regular and overtime checks, and it immediately showed me that my payroll system was using what's called the "aggregate method" for my overtime check, which does exactly what the previous commenter explained - it treats each check as if that's what you'd make all year. The tool also showed me precisely how much I'd get back at tax time and gave recommendations for adjusting my W-4 to get more money in each check instead of waiting for a refund. Super helpful for understanding all the weird tax stuff our employers never explain to us!

Just wanted to update after trying taxr.ai from the recommendation above. It was actually really helpful! I uploaded my last few paychecks including two with heavy overtime, and it broke down exactly why my withholding was so much higher on those checks. The best part was it showed me I was on track to get a $2,300 refund if I didn't change anything, and then walked me through exactly what to put on a new W-4 form to get more money in each check now instead of waiting until tax time. I submitted the updated form to HR yesterday. The whole process took maybe 15 minutes and was way easier than I expected.

If you're still confused about your withholding after checking everything else, you might want to call the IRS directly to get a definitive answer. I know, I know - getting through to the IRS seems impossible. I tried for WEEKS last year with a similar issue. Then I found this service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent in under 20 minutes. They have this system that navigates all the IRS phone menus and holds your place in line, then calls you when an agent is about to pick up. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent I spoke with explained exactly how withholding is calculated for supplemental wages (which is what overtime is considered) and confirmed I wasn't being overtaxed - just overwithholding. Saved me tons of stress wondering if my employer was doing something wrong.

Just have to report back that I tried Claimyr after seeing it mentioned here. Not gonna lie, I was super skeptical that anything could get me through to the IRS after all my failed attempts. But holy crap it actually worked! Got a call back in about 25 minutes and spoke to a real IRS agent who helped me sort out my issues. The agent confirmed exactly what others here were saying about overtime withholding - it's calculated differently because it's considered "supplemental wages" and my employer was using the aggregate method. The time saved was worth every penny since I had already burned through hours of my life listening to IRS hold music. Never going back to doing it the old way again.

Your employer is probably using the "aggregate method" for supplemental wages. There are two ways employers can calculate withholding on overtime/bonuses: 1. Flat rate method: A simple 22% flat withholding on supplemental wages 2. Aggregate method: They add the supplemental wages to your regular wages and calculate withholding as if the total was your regular paycheck, then subtract what was already withheld from your regular check The aggregate method almost always results in higher withholding because it makes the system think you're in a higher tax bracket. It's perfectly legal but super annoying. You'll get the extra money back when you file your taxes, but in the meantime, your employer is basically giving the government an interest-free loan with YOUR money. I'd talk to your payroll department and ask if they can use the flat rate method instead!

Isnt this a tax bracket thing? When u earn more in a pay period it gets taxed higher? My boss always said "don't work overtime cuz they take it all in taxes anyway" lol