Alabama Overtime Tax Law: What you should know so far
September 15, 2023
For the tax year beginning on or after January 1, 2024, overtime pay received by a full-time hourly wage paid employee for hours worked above 40 in any given week is excluded from gross income and, therefore, exempt from Alabama state income tax.
Tied with this exemption are employer reporting requirements to ALDOR. Employers are required to report the total aggregate amount of overtime paid and the total number of employees who received overtime pay.
WHEN and WHAT do I report?
One-Time Report – Historical 2023 Overtime Data:
Due January 31, 2024
Employers are required to report the following:
- Aggregate amount of overtime paid during 2023 calendar year.
- Total number of full-time hourly employees who received overtime pay in 2023.
Monthly/Quarterly Reporting Beginning for 2024 Tax Year:
Reported with from A-6 (monthly) and Form A-1 (quarterly) withholding returns.
Employers are required to report the following:
- Aggregate amount of overtime paid during the period (monthly/quarter)
- Total number of full-time hourly employees who received overtime pay.
HOW do I report?
You will report using forms or processes already in place in your My Alabama Taxes account.
One-Time Report – Historical 2023 Overtime Data:
Two options for reporting through My Alabama Taxes:
- If you ARE NOT a Bulk Flier (your typical employer): A link will be provided within Form A-3 that routes you to manually enter the required data.
- If you ARE a Bulk Filer: A one-time bulk file process separate from the current Form A-3 bulk file process will be needed. For layout instructions, please click on the following links.
Monthly/Quarterly Reporting Beginning for 2024 Tax Year:
Two options for reporting through My Alabama Taxes:
- If you ARE NOT a Bulk Filer (your typical employer): You will input the data into the new field boxes on the Form A-6 and A-1 withholding returns.
- If you ARE a Bulk Filer: You will input the data utilizing the current bulk file for the A-6 and A-1 return by adding two new required text fields. *Additional information and schemas will soon be available for this process.
To learn more about this process and other details, visit Alabama Overtime Tax Exemption – Alabama Department of Revenue.