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No Tax on Overtime: Georgia 2026 — State & Federal Rules

Daniel · CountryTaxCalc Updated June 2026
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At a glance

Key Facts

Federal OT deduction (OBBBA)
Up to $12,500 single / $25,000 MFJ of overtime premium — reduced by $100 per $1,000 of MAGI above $150k/$300k
Georgia income tax rate
4.99% flat rate on all income (2026)
Georgia standard deduction
$15,000 single / $30,000 MFJ (2026, HB 463)
FICA on overtime
7.65% — unchanged by OBBBA
Georgia overtime exclusion
Up to $1,750 of qualified overtime compensation for full-time hourly employees, tax years 2026–2028 (HB 463)
OBBBA sunset
Deduction expires after December 31, 2028
Introduction
Georgia has a flat state income tax rate of 4.99% for 2026 on all income including overtime pay. While the OBBBA federal overtime deduction can remove federal income tax on up to $12,500 of qualifying overtime premium (the pay above your regular rate) for 2026–2028, Georgia excludes only up to $1,750 of qualified overtime compensation for full-time hourly employees (HB 463), so Georgia workers still owe state tax on the rest of their overtime. This guide breaks down what Georgia overtime workers actually keep after both federal and state taxes.
Section 01

How the Federal OT Deduction Works in Georgia

The OBBBA overtime deduction is claimed on federal Schedule 1-A and reduces your federal taxable income, not your AGI. Georgia starts from federal AGI, so the federal deduction does not carry over to your Georgia return. Georgia instead has its own, smaller exclusion: HB 463 lets full-time hourly employees exclude up to $1,750 of qualified overtime compensation (as defined in IRC section 225) from Georgia taxable income for tax years 2026 through 2028, and the rest of the overtime remains taxable at 4.99%. For a Georgia worker with $8,000 of overtime pay at time-and-a-half (a $2,667 premium), the federal deduction saves approximately $267–$320 in federal income tax (at a 10–12% bracket) and Georgia's exclusion saves $87 ($1,750 × 4.99%); Georgia tax on all $8,000 of overtime pay is $399.
Section 02

Georgia's Flat Income Tax Rate

Georgia's flat income tax rate is 4.99% for tax year 2026 (HB 463), down from 5.19% for 2025. Unlike graduated states, Georgia applies this rate to all taxable income — there is no lower bracket for moderate earners. This means a Georgia factory worker earning $55,000 (including overtime) pays 4.99% on every dollar of taxable income above the $15,000 standard deduction and any overtime exclusion. On $8,000 of overtime income, Georgia tax is $399.20. The flat rate makes the math simple — multiply overtime income by 4.99% to estimate Georgia state tax owed.
Section 03

Qualifying Overtime Under OBBBA

The OBBBA overtime deduction applies to the premium portion of overtime pay required by the Fair Labor Standards Act (FLSA) — the extra half in time-and-a-half (1.5×) for hours worked above 40 per week by non-exempt employees, not the base-rate portion. Self-employed workers, independent contractors, and employees classified as FLSA-exempt (salaried professionals, executives, administrative employees above the salary threshold) do not earn FLSA overtime and therefore do not have "qualifying overtime" for purposes of the deduction. Most hourly workers in manufacturing, construction, healthcare support, and food service are non-exempt and qualify.
Section 04

Worked Example: Georgia Manufacturing Worker

A Georgia factory worker earning $22/hour works 55 hours per week for 30 weeks. Regular pay: $22 × 40 hrs × 30 = $26,400. Overtime pay: $33 × 15 hrs × 30 = $14,850. Total wages: $41,250. Only the premium ($11 × 15 hrs × 30 = $4,950, one third of the overtime pay) qualifies for the OBBBA deduction. Federal taxable income: $41,250 − $16,100 standard deduction − $4,950 OT deduction = $20,200. Federal income tax: ~$2,176. Georgia taxable income: $41,250 − $15,000 GA standard deduction − $1,750 GA overtime exclusion = $24,500. Georgia income tax: ~$1,223 (4.99%). FICA: $3,156. Total tax: ~$6,554 out of $41,250. Without the OBBBA deduction and the Georgia exclusion, federal income tax would be approximately $2,770 and Georgia tax $1,310 — total savings about $681 ($594 federal + $87 Georgia). Use our No Tax on Overtime Calculator for your specific scenario.
Section 05

Will Georgia Conform to OBBBA?

Georgia has not adopted the federal deduction itself, but HB 463 (2026) created a Georgia exclusion for qualified overtime compensation as defined in IRC section 225: up to $1,750 for a full-time employee paid by an hourly wage, for tax years 2026 through 2028, after which the provision is repealed. Employers must report qualified overtime compensation to the Georgia Department of Revenue. Only the first $1,750 is excluded, so the rest of your overtime is taxable at 4.99%. Check the Georgia Department of Revenue website for guidance as the 2027 legislative session approaches.
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FAQ

Frequently Asked Questions

Does Georgia tax overtime at a higher rate than regular pay?

No. Georgia's flat 4.99% rate (2026) applies to all income equally — overtime pay is not taxed at a higher rate. You might feel that overtime is "taxed more" because higher total income can push you into a higher federal bracket, but Georgia itself has a flat rate with no bracket jump.

Do Georgia employees get the OBBBA overtime deduction automatically?

No. You claim the deduction when you file your federal tax return. Your employer withholds taxes based on standard withholding tables without the deduction. Most workers will see a refund when they file, reflecting the deduction reducing their year-end tax liability below what was withheld.

Who qualifies for overtime under the OBBBA deduction?

Employees who receive FLSA overtime pay (non-exempt hourly workers paid at 1.5× for hours above 40/week); only the premium above the regular rate is deductible. Salaried exempt employees, independent contractors, and self-employed workers do not receive FLSA overtime and are not eligible for the OBBBA overtime deduction.

When does the OBBBA overtime deduction expire?

The overtime deduction is scheduled to expire after December 31, 2028. Congress would need to extend or make it permanent. Workers relying on the savings should plan for the sunset and build savings while the deduction is active.
Disclaimer:This guide is for educational purposes only and does not constitute tax, legal, or financial advice. Georgia tax rates and OBBBA regulations are subject to change. Consult a licensed CPA or tax professional for advice specific to your situation.
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