The Alabama state income tax exemption applicable to overtime wages ends on June 30, 2025. After this date, any amounts paid/received as overtime compensation are subject to income tax.
The requirement to report overtime wage data to the Alabama Department of Revenue also ends once the final exempt overtime wages are reported on the employer’s monthly or quarterly withholding tax filing. Each employer should still denote the amount of exempt wages an employee earned during the period of the 2025 tax year in which the exemption was in effect within Box 14 of employee’s Form W-2 using “EX OT WAGES” as the indicator. Do not include exempt overtime wages in Box 16 of the W-2.
For more information about the overtime exemption visit revenue.alabama.gov/individual-corporate/overtime-pay-exemption-amended/.
If you have questions about this notice, reach out to us at the following address, telephone number, or email address.
Contact
Income Tax Administration
Withholding Section
375 South Ripley Street
Montgomery, AL 36104
334-242-1300
withholdingtax@revenue.alabama.gov
