Guide for No-Income Tax States
Residents of states like Texas, Florida, and Washington have a simpler path to tax-free overtime. Here is how the 2026 federal changes apply to you.
"Cleaner" Savings
If you live in a state with no wage income tax, you skip the biggest hurdle of the 2026 reforms: State Conformity. You don't need to wait for your state legislature to pass a bill to match federal rules.
In Florida or Texas, for example, 100% of the federal tax savings stay in your pocket because there is no secondary state tax "bucket" to worry about.
The Remaining Tax Component: FICA
It is a common misconception that "tax-free" means you keep every single cent. Even in a no-income-tax state, payroll taxes still apply.
You will still see 7.65% withheld from your overtime pay for Social Security and Medicare (FICA). The 2026 OBBBA proposal specifically targets the Federal Income Tax portion of your withholding.
Who This Applies To
This "cleaner" federal savings model applies to residents of:
Quick Verification
Use the official federal withholding estimator to see how your specific 2026 earnings will be impacted by the new deduction limits.