Beginning January 1, 2024, pay received by a full-time hourly wage paid employee for hours worked in excess of 40 in any given work week are exempt from Alabama state income tax.
For information on this “overtime” exemption, including FAQs, filing specifications, and the employer reporting requirements noted below visit https://www.revenue.alabama.gov/individual-corporate/overtime-exemption/.
Required Employer Reports
Coupled with this exemption are new overtime reporting requirements for employers. Employers will be required to report:
1. The total aggregate amount of exempt overtime wages.
2. The total number of employees who received the exempt overtime wages.
2023 Historical Report: This historical calendar year overtime data is due no later than January 31, 2024, and will be reported electronically with the annual reconciliation Form A3.
Monthly and Quarterly Reports: Beginning with the 2024 tax year, these amounts will be reported electronically on the monthly Form A6 or quarterly Form A1 withholding filings.
The hourly overtime wage exemption will expire June 29, 2025, unless extended by an act of the legislature.
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