Income Tax Exemption for Overtime Pay
Alabama’s income tax exemption for overtime pay is scheduled to end on June 30, 2025.
The exemption applies to overtime compensation during the following periods:
- January 1, 2024 – June 30, 2025: for hourly employees
- October 1, 2024 – June 30, 2025: for salaried nonexempt employees
State lawmakers may consider extending the exemption based on its effect on Alabama’s revenue.
There are monthly, quarterly, and annual employer reporting requirements that FrankCrum handles. You can check out the FAQs below and if you have a query on this tax exemption please send an email to tax_group@frankcrum.com.
Overtime Pay Exemption - Amended - Alabama Department of Revenue