Ok, like most of corporate America, I am getting my status changed from exempt to non-exempt. As such, my company said I have to take a 15% pay decrease. Their thinking: average employee works 5 hours OT/week which equals that 15%. However, since I will have to work OT in order to make myself whole (make the same amount I made last year), will my OT wages be taxed higher than 40 hour wages? If so, my company has not thought this through as my in-pocket will be less.

Also, if its not too much for you great people, if I'm making $50,000 and now am making $42,500, any thoughts on how I can figure out just how much OT I'll need to work to be whole so I can prove to my management chain?

Thanks a lot, everyone. I'm new at this and slightly irritated.

If you're going from exempt to non-exempt and from $50.000 to $42,500 you need to make up $7500 to be made whole. Assuming you get time and a half for overtime and work 5 hours a week for average 50 weeks a year you should earn the same as when on salary if you make at least $20.00/hourly rate. And unless that puts you in a different tax bracket than before there's no reason for higher tax rate.$20 X 1.5 X 5 X 50 = $7500.

Thanks for the answer. I had been told 5 hours OT/week for the year would make me whole, but then someone mentioned OT wages were taxed at your highest marginal tax level and regular wages are not, so I wasn't sure.