How the estimate works

This guide explains what the calculator is estimating and how to interpret the number without assuming anything about your state tax situation.

What is the “overtime premium” used in the estimate?

The estimate models the premium portion of overtime pay (the extra amount above your regular hourly rate). The goal is to keep the model focused on the part of overtime that is commonly described in proposals as the “overtime premium,” rather than all overtime wages.

Why caps and phase-outs matter

The model applies published caps and a phase-out range so the estimate does not keep rising indefinitely at higher income levels. That’s why two people with very different pay levels can see similar estimates once limits apply.

MAGI input vs. MAGI estimate

If you provide MAGI, the calculator uses it to evaluate phase-out. If you leave MAGI blank, the tool estimates it from the scenario inputs. If your household income is more complex (multiple jobs, bonuses, spouse income), using the IRS estimator can give a better withholding reality-check.

Next: Withholding vs tax return and Sources.