Tax Year 2026Updated July 13, 2026

Does Wyoming Tax Overtime in 2026?

No - Wyoming does not tax overtime because it has no state income tax. The Wyoming Constitution prohibits any tax on income. Overtime pay – like all wages – owes $0 in Wyoming state tax. Wyoming workers still benefit from the federal OBBBA overtime deduction (IRC §225), which allows deducting up to $12,500 ($25,000 MFJ) in overtime premium pay from federal adjusted gross income.

How Wyoming's Overtime Tax Treatment Works

Wyoming is one of nine states with no state income tax. The prohibition is enshrined in the Wyoming Constitution (Article 15, Section 19), which states that no tax shall be imposed upon income. Because there is no state income tax, overtime pay faces no state-level taxation.

Federal benefit still applies: Wyoming workers can claim the federal OBBBA overtime deduction (IRC §225) on their federal return, deducting up to $12,500 ($25,000 MFJ) in qualifying overtime premium pay from federal AGI.

Mineral severance taxes are not payroll taxes: Wyoming funds much of its government through mineral severance taxes on coal, oil, and gas extraction. These taxes are paid by mining and energy companies on the value of minerals produced – they are not withheld from employee paychecks and do not affect workers' overtime pay. Federal FICA taxes (6.2% Social Security + 1.45% Medicare) still apply to all overtime wages.

Federal Overtime Deduction Quick Reference

Detail	Value
IRC Section	§225 (OBBBA)
Maximum deduction	$12,500 overtime ($25,000 MFJ)
Deduction type	Above-the-line (Schedule 1-A)
FICA still applies?	Yes (Social Security 6.2% + Medicare 1.45%)
MFS eligible?	No (MFJ or Single/HoH only)
Effective dates	Jan 1, 2025 – Dec 31, 2028
Wyoming treatment	Does not conform
What qualifies?	Overtime premium only (the 0.5x above regular rate), FLSA non-exempt employees

Worked Examples Comparing Federal and Wyoming Treatment

Example 1: Coal miner (single filer, $50,000 income, $8,000 overtime premium)

Federal return:
Qualifying overtime premium: $8,000
Overtime deduction claimed: $8,000 (capped at $12,500)
Estimated federal tax savings: $960.00

Wyoming return:
Wyoming has no state income tax. This coal miner's $8,000 in overtime premium pay owes $0 in Wyoming state tax. The federal OBBBA overtime deduction (IRC §225) provides the only tax relief, reducing federal income tax by an estimated $960 at the 12% bracket.

Example 2: Oil field worker (single filer, $80,000 income, $12,500 overtime premium - federal cap reached)

Federal return:
Qualifying overtime premium: $12,500
Overtime deduction claimed: $12,500 (capped at $12,500)
Estimated federal tax savings: $2,750.00

Wyoming return:
Wyoming has no state income tax, so no state tax applies to overtime or any other wages. The federal OBBBA deduction caps at $12,500 for single filers, saving an estimated $2,750 in federal taxes at the 22% bracket. Wyoming's mineral severance taxes apply to mining/extraction companies, not to individual workers' wages.

Wyoming – Constitutional Prohibition on Income Tax

Wyoming's ban on income tax is constitutionally protected under Article 15, Section 19 of the Wyoming Constitution. Changing this would require a constitutional amendment – passage by two-thirds of each legislative chamber followed by voter approval. Wyoming has relied on mineral severance taxes, sales taxes, and federal mineral royalties to fund state government without an income tax. This model has been sustainable due to Wyoming's massive coal, oil, and natural gas resources.

Mining and Energy Sector Overtime

Wyoming's economy is heavily tied to energy and mineral extraction. The state is:

The nation's #1 coal producer: Powder River Basin coal mines employ thousands of workers who frequently earn overtime, especially during peak production periods and maintenance shutdowns.
A major oil and gas producer: Oil field workers, drilling crews, and pipeline workers in Wyoming earn substantial overtime, often working rotational schedules with 12-hour days.
A trona and uranium producer: Wyoming is the world's largest producer of trona (used to make soda ash) and has significant uranium deposits.

Non-exempt workers in these industries earn FLSA overtime at 1.5x for hours over 40/week and can claim the federal OBBBA deduction on the premium portion. Wyoming's mineral severance taxes are paid by the producing companies, not deducted from workers' paychecks.

No Corporate Income Tax Either

Wyoming has neither a personal income tax nor a corporate income tax. The state funds itself primarily through mineral severance taxes, sales taxes, and federal mineral royalties. This comprehensive absence of income taxation means neither workers nor their employers face state income tax on any form of earnings, including overtime.

Related Tools

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All 51 States: Tips & Overtime Tax Map

Frequently Asked Questions

Does Wyoming tax overtime pay in 2026?

No. Wyoming has no state income tax at all. The Wyoming Constitution (Article 15, Section 19) prohibits a state income tax. Overtime pay – like all wage income – is not taxed at the state level. Wyoming workers only owe federal income tax and FICA on overtime earnings.

Do Wyoming workers benefit from the federal overtime deduction?

Yes. The federal OBBBA overtime deduction (IRC §225) allows qualifying workers to deduct up to $12,500 ($25,000 for married filing jointly) in overtime premium pay from federal adjusted gross income. Wyoming workers benefit from this on their federal return, which is their only income tax obligation.

Does Wyoming's mineral severance tax affect overtime workers?

No. Wyoming's mineral severance taxes are levied on the extraction and production of minerals (coal, oil, natural gas, trona, uranium). These taxes are paid by mining and extraction companies based on the value of minerals produced – they are not payroll taxes and do not affect individual workers' wages or overtime pay. A coal miner or oil field worker in Wyoming does not pay mineral severance tax from their paycheck.

How does overtime work in Wyoming's mining and energy sector?

Wyoming is the nation's top coal-producing state and a major oil and natural gas producer. Mining and energy workers frequently earn significant overtime, especially during production surges and seasonal operations. Under the federal FLSA, non-exempt workers must receive 1.5x their regular rate for hours over 40 in a workweek. Wyoming has no separate state overtime law – FLSA rules apply. The overtime premium (the extra 0.5x above straight time) qualifies for the federal OBBBA deduction.

Is Wyoming's income tax prohibition in the constitution?

Yes. Wyoming's constitution (Article 15, Section 19) states that no tax shall be imposed upon income. This constitutional prohibition can only be changed by a constitutional amendment, which requires passage by two-thirds of each chamber of the legislature and approval by a majority of voters. Wyoming has had this prohibition since it was added to the constitution, and there is no political movement to change it.

Does Wyoming have any payroll taxes on overtime earnings?

Wyoming does not impose any employee-side state payroll or income taxes. Employers pay State Unemployment Insurance (UI) tax and Workers' Compensation premiums, but these are employer-only obligations. Employees see no Wyoming state deductions from their paychecks. Federal FICA taxes (Social Security and Medicare) still apply to all overtime wages.