The Alabama state income tax exemption for overtime wages ended on June 30, 2025. The Alabama Department of Revenue explains the reporting requirements for employers.
Exempt overtime wages earned on or before June 30, 2025, but not paid until July 1, 2025, or later may be reported on the July Form A-6, Employer’s Monthly Return of Income Tax Withheld, or the September Form A-1, Employer’s Quarterly Return of Income Tax Withheld.
The requirement to report exempt overtime wage data ends with the last withholding report to include any exempt overtime wages paid. Employers will still report exempt overtime wages earned from January 1, 2025, to June 30, 2025, on the employee’s Form W-2, Box 14, Other, using “EX OT WAGES” as the indicator.
Employers should not include any exempt overtime wages in Box 16, State wages, tips, etc. For employers that use the bulk filing method, the overtime fields should be kept in the bulk filing spreadsheets, but the fields should reflect zero exempt overtime wages
Interested in more state and local payroll coverage? PayrollOrg’s PayState Update eNewsletter is perfect for you.
Lia Coniglio, Esq., is Managing Editor of PayState Update and Senior Manager of State Payroll Information Resources for PayrollOrg.
