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Important information for companies using Alabama SWT Exempt Overtime Wages

Alabama (AL) overtime pay is exempt from state taxes for “hourly” employees who work more than 40 hours a week (not over 8 hours a day – only over 40 hours a week). There will not be a tax update to track the amount of Alabama Exempt Overtime.  

The original 2021 SP17 build 0109 and 2023 SP3 build 0114 released in late December included a time card earnings type for the Overtime Exemption for AL.  This will be removed in the next update. You will need to create an other pay for this exemption. If payroll checks were processed using the Overtime Exempt (AL) earnings type an additional step of voiding the original check and reprocessing without the Overtime Exempt (AL) will need to be completed for tax reporting purposes. 

For important details and instructions on how to setup and use an other pay for these wages see Alabama Overtime Exemption effective 1/1/2024 for further instructions.