Premium Rate Factor 1.5 / 1.0 on a Pay Stub: What It Means

Short answer: a premium rate factor is the multiplier applied to your regular rate for a block of hours. 1.0 is straight time, 1.5 is time and a half, and 0.5 is the overtime premium alone — the extra half on top of straight time. Check your own numbers with the FLSA Overtime Calculator.

Why a pay stub shows a "factor" at all

Under the Fair Labor Standards Act, every hour over 40 in a workweek must be paid at no less than one and one-half times the employee's regular rate (29 U.S.C. §207(a)(1)). Payroll systems store that rule as a multiplier — the factor — instead of a separate dollar rate, because the regular rate can change from week to week when bonuses, shift differentials or commissions are earned (29 CFR §778.109).

The three factors you will see

Some payroll systems pay overtime in one line at 1.5. Others pay it in two lines: every hour worked, including overtime hours, at 1.0, plus a separate line of overtime hours at 0.5. Both produce the same total pay.

Worked example: same pay, two layouts

An hourly employee earns $20 and works 45 hours in one workweek.

Layout A — one overtime line

• Regular: 40 hours × $20 × 1.0 = $800.00
• Overtime: 5 hours × $20 × 1.5 = $150.00
• Total: $950.00

Layout B — straight time plus premium

• Straight time: 45 hours × $20 × 1.0 = $900.00
• OT premium: 5 hours × $20 × 0.5 = $50.00
• Total: $950.00

Layout B is common when the regular rate includes a bonus or differential: all hours are first paid at straight time, and the premium is then calculated on the regular rate for the week, as 29 CFR §778.110(b) describes.

Which part counts for the overtime tax deduction

For tax years 2025–2028, workers can deduct qualified overtime compensation — only the premium portion of overtime the FLSA requires, not the full overtime hour (26 U.S.C. §225). In the example above, the deductible amount is the $50.00 premium, not the $150.00 overtime line. That is the number Layout B shows directly, and it is the number employers must report in Form W-2, box 12, code TT starting with tax year 2026 (IRS Fact Sheet 2026-13).

If your stub uses Layout A, divide the 1.5× overtime pay by 3 to get the premium ($150 ÷ 3 = $50). For double time paid only because a state law or contract requires it, only the FLSA-required half-time premium counts. The No Tax on Overtime Calculator does this conversion for you.

When the factor looks wrong

• The overtime rate equals your base rate × 1.5, but you earned a bonus that week. A non-discretionary bonus must be added to the regular rate before the 1.5 factor is applied (29 CFR §778.208–§778.210). See how bonuses affect overtime.
• You worked two jobs at different rates. The factor is applied to a weighted average rate, not to one of the two rates (29 CFR §778.115). Use the Blended Overtime Calculator.
• Overtime appears only when the pay period passes 80 hours. Overtime is counted per workweek, never across a two-week pay period (29 CFR §778.104). See overtime on biweekly and semi-monthly payroll.

Sources

• 29 U.S.C. §207(a)(1) — overtime at one and one-half times the regular rate
• 29 CFR §778.109 — the regular rate is an hourly rate
• 29 CFR §778.110 — hourly rate employees, with bonus example
• 26 U.S.C. §225 — qualified overtime compensation deduction
• IRS — Fact Sheet 2026-13, qualified overtime compensation FAQs (August 6, 2026)