I used to be the nurse who always said yes to overtime. More hours meant more money, and more money meant I was getting ahead—at least, that’s what I thought. But after years of grinding, sacrificing my time, and realizing how much of my hard-earned overtime pay was going straight to taxes, I made a change.
I stopped working overtime. And honestly? I don’t miss it.
Here’s why:
1. Overtime Pay Isn’t as Good as It Looks
When you see time-and-a-half pay, it’s tempting. If your base rate is $50 an hour, overtime bumps that up to $75 an hour. Sounds great, right? But once taxes take their share, that number shrinks fast.
In the U.S., we have a progressive tax system, which means the more you earn, the higher your tax rate. When you work overtime, you’re not just earning more—you’re pushing yourself into a higher tax bracket. And guess what? A bigger chunk of that extra money is going straight to Uncle Sam.
How Taxes Eat Up Your Overtime Pay
Let’s say you’re a nurse making $90,000 a year. You decide to grind it out and pull in an extra $20,000 in overtime. That extra $20,000 isn’t taxed the same way as your base salary—it’s taxed at your highest marginal tax rate.
For 2024, a single nurse making between $95,375 and $182,100 is in the 24% tax bracket. That means at least $4,800 of your $20,000 overtime pay goes straight to taxes—and that’s before factoring in state taxes, Social Security, and Medicare.
So while you think you’re making $75 an hour, after taxes and deductions, your real take-home pay might be closer to $50-$55 an hour. Not as exciting anymore, huh?
2. I’d Rather Make My Money Work for Me
Instead of burning myself out for extra hours, I focus on making my money work for me through investing, finding ways to make more money and also taking advantage of tax benefits of owning a business.
Here’s how I legally lower my taxable income while still increasing my wealth:
1. Maxing Out My Pre-Tax Retirement Accounts
- If your hospital offers a 401(k) or 403(b), maxing out contributions reduces your taxable income. For 2024, you can contribute up to $23,000 ($30,500 if you’re 50+).
- That means if you earn $110,000 but contribute $23,000, the IRS only taxes you on $87,000—saving you thousands in taxes.
2. Using an HSA (Health Savings Account)
- If you have a high-deductible health plan, contributing to an HSA lowers your taxable income AND lets your money grow tax-free for medical expenses.
- You can contribute up to $4,150 (or $8,300 for families) in 2024.
3. Investing in a Roth IRA
- While a Roth IRA doesn’t reduce taxable income now, it grows tax-free, so I never have to pay taxes on that money again in retirement.
- If you want to learn how to invest, you can sign up for my free investing class.
4. Starting a Side Hustle with Tax Benefits
- Instead of working overtime, I focus on building multiple income streams, like my financial education business. The best part? Many business expenses are tax-deductible.
3. Time Is More Valuable Than Money
At the end of the day, I realized I wasn’t just giving up money to taxes—I was giving up my time.
- Time with my family.
- Time to travel and enjoy life.
- Time to build a business that pays me without trading hours for dollars.
Instead of exhausting myself with extra shifts, I focus on increasing my income strategically—through investing, growing my business, and using tax-advantaged accounts to keep more of what I earn.
Final Thoughts
I’m not saying you should never work overtime. But if you’re constantly chasing extra shifts thinking it’s the only way to get ahead, take a step back. Look at how much of that money you actually keep and consider smarter ways to grow your income.
Because at the end of the day, the goal isn’t to work harder—it’s to work smarter.
