Net overtime pay after PAYE, at 1.5x or 2x the normal rate.
Net overtime / month
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Gross overtime / mo
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Tax on overtime / mo
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No penalty rate, but a sting all the same
A persistent myth on South African shop floors is that the taxman takes a bigger cut of overtime than of normal pay. He does not. There is no special overtime tax rate. What actually happens is subtler and worth understanding: overtime stacks on top of your salary, and because the income-tax scale is progressive, that extra money is taxed at your marginal rate, which sits above your average rate. So overtime feels more heavily taxed even though no penalty exists. This calculator captures that honestly by taxing your salary with and without the overtime and treating the difference as the tax on the overtime.
The gross side has its own boost. Under the Basic Conditions of Employment Act, ordinary overtime is paid at 1.5 times your normal hourly rate, and work on a Sunday or public holiday is typically paid at double. So before any tax, your overtime hours already earn more per hour than your normal ones. The tool lets you pick the multiplier so the gross reflects the right premium.
Ten weekday overtime hours on a R450,000 salary
Take the defaults: a normal rate of R200 an hour, 10 overtime hours a month at the 1.5 weekday multiplier, on a R450,000 annual salary, under 65. A R450,000 salary sits in the band the calculator taxes at 31 percent on its top rand, so that is the marginal rate the overtime meets. Using the rates this calculator applies, the month works out like this.
| Step | Amount |
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So R3,000 of gross overtime lands about R2,070 in your pocket, with roughly R930 going to tax. That works out to an effective 31 percent on the overtime, exactly the marginal rate of that salary band, which confirms the no-penalty point: the overtime is taxed at the rate of the income it sits on top of, no more. The chart above shows the gross overtime split into what you keep and what the marginal rate takes.
When overtime can cost more than 31 percent
Here is the edge case the tool surfaces. If your salary sits near the top of a band, a chunk of overtime can push part of it into the next band, so the overtime is taxed partly at one rate and partly at a higher one. Someone earning just under R512,800, the ceiling the calculator uses for the 31 percent band, would see overtime that crosses that line taxed at 36 percent on the portion above it. The tool handles this automatically by comparing total tax before and after, rather than applying a single flat rate, which is exactly why it annualises the overtime first.
A second subtlety: managers and senior employees are often excluded from statutory overtime pay, and many contracts cap or buy out overtime. The calculator assumes you are actually paid the premium. If your contract folds overtime into your salary, the marginal-rate logic still applies to any genuinely extra earnings, but check your employment terms before counting on the 1.5 or double rate.
Will my employer deduct exactly this much PAYE on overtime?
Roughly, but payroll systems sometimes annualise a single month's total pay, including the overtime, which can over-deduct in a heavy overtime month and correct later. Your final liability for the year is what this marginal-rate approach captures. If too much PAYE comes off during the year, SARS settles it on assessment, so an over-deduction in one month is not money lost.
Is double-time worth almost twice as much after tax?
The gross doubles when you switch from 1.5 to 2 times, and since the same marginal rate applies to both, the net roughly scales with the gross. At a 31 percent marginal rate, double-time keeps about 69 percent in your hand just as weekday overtime does, so the after-tax gap between the two multipliers mirrors the gross gap. Switch the multiplier in the tool to see your own figure.