<prompt> Human: At my work we almost regularly pull 100 hours on a pay period. He tried paying overtime but the guys cplained their net pay was less than if they had only made regular pay.I am trying to figure out if it is worth making the overtime to get a possibly larger return come tax time or is it better to just work for regular pay so I can take home a larger cheque on pay day.  <response>: There is no tax rate that means that you earn less if you get overtime. And working overtime hours for regular pay makes so little sense for you that I am unsure how you could have possibly come to the conclusion that it was better.You are seeing a difference between marginal and effective tax rates. Tax brackets are marginal, which means that the first X amount of dollars you earn are taxed at a lower rate than the last X dollars you earn. Since payroll is able to see how much you earn per payperiod and therefore how much you would earn per year, they are able to smooth the tax rate to one percentage that they take out of your check.For example, with made up numbers because I dont know Canadian tax rates:Lets say you earn 50,000year.The first 10,000 is taxed at 10. From 10,001 to 25,000 you are taxed at 15. From 25,001 until 45,000 you are taxed at 20, and from 45,001 until 80,000 you are taxed at 25. Lets see how much tax you would owe for you wages of 50,000.0.10 10,000 0.15 25,000 - 10,001 0.20 45,000 - 25,001 .25 50,000 - 45,001 8,499.40That is an effective tax rate of:8,499.4050,000 17Notice how you have no tax bracket that is at 17. This is simply the combination of all the tax brackets you are subject to. It is also what you see in your checks.Now, lets say you get a raise of 1,000. That 1,000 raise will be subject to that 25 tax bracket, so you will see 750 of that in your checks throughout the year. You may think your taxes went way higher just because you received a raise, but as you can see from the above example, thats not true! It was subject to the highest tax bracket you are currently in and was not calculated based on your effective tax rate. Overtime work is just like a raise. The only difference is you will see more taxes withheld from a large overtime check than from an equivalent raise. Why? Because of the effective tax rate calculation. For each paycheck, the tax is calculated as if you will make that for every paycheck of the year. But you know you wont, since it is just a special overtime work. However, payroll will still calculate a new effective tax rate to tax the check at. So if you usually get paid bi-weekly at a gross wage of 1,923 for an annual salary of 50,000, but because of overtime your gross wage was 2,500 for the pay period - well, the payroll system will estimate that you will earn 26 2,5000 65,000year and tax you accordingly. That will raise the tax rate for that check BUT will not affect your actual tax liability.That is why you often receive a large tax refund come tax time, because the payroll system will make certain assumptions about how much you will earn over the year and withheld taxes at that effective rate. It is often wrong, resulting in a refund.TL;DR Get that overtime pay for overtime hours - you are not earning less by getting paid overtime. 