Overtime Pay vs Side Hustle Income
Overtime pay at 1.5x your regular rate may seem attractive, but higher income pushes you into higher tax brackets.
Earning $60,000 base salary ($30/hour), overtime pays $45/hour—but working 10 extra hours weekly (500 annual hours) adds $22,500 to income, potentially moving you from 12% to 22% federal bracket plus higher state taxes.
Effective taxation on overtime can reach 30-40% (federal + state + FICA), making actual take-home only $27-$31/hour.
Side hustles offer different economics: self-employment income faces 15.3% self-employment tax but allows business deductions (home office, equipment, mileage, software) reducing taxable income by 20-40%.
A side hustle earning $50/hour might net $35-$40 after expenses and taxes—comparable to $45 overtime but with more flexibility and skill development.
Consider long-term value: overtime remains capped at 1.5x, while successful side hustles can scale beyond hourly limits (consulting $100-$300/hour, online courses, productized services).
However, side hustles require startup time, business development, and administrative overhead.
Overtime is guaranteed and immediate.
Calculate effective hourly rates including all costs: overtime after-tax rate vs side hustle net rate after expenses and taxes.
Factor in sustainability—excessive overtime leads to burnout, while side hustles may grow into full businesses.