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Alabama Overtime Pay Exemption Expires
June 18, 2025
At a Glance
Alabama's 2024 overtime exemption will expire on June 30, 2025, making overtime pay taxable as of July 1, 2025.
Final use of the exemption to apply, will require employers to pay any June 2025 wages that include earned overtime by July 31, 2025.
Employers should also populate fields 24-26 on Forms A-1 (Employer’s Quarterly Return of Income Tax Withheld) and A-6 (Employer’s Monthly Return of Income Tax Withheld) as follows:
- Field 24: 0
- Field 25: 0.00
- Field 26: 1 (which indicates 0)
Finally, employers should use “EX OT WAGES” as the identifier on Box 14 of the employee’s W-2 form to report exempt overtime wages.
Refer to the state's Department of Revenue website for more information.
Next Steps
Paylocity will email clients with details about the expiration of the Alabama overtime exemption and update its system accordingly. Employers who need to contact the state's agency should email witholdingtax@revenue.alabama.gov.
Thank you for choosing Paylocity as your Payroll Tax and HCM partner. This information is provided as a courtesy, may change, and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney, or Advisor.
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