Hi there,

This is to inform you of an upcoming change regarding the temporary Alabama state income tax exemption on overtime pay. As you know, this exemption has been in effect for eligible hourly employees for overtime pay received beginning on or after October 1, 2024, through June 30, 2025.

Please be aware that the current law establishing this exemption is scheduled to expire on June 30, 2025. Unless the Alabama legislature acts to extend it, overtime pay earned and payable on or after the July 1, 2025 check date, will once again be subject to Alabama state income tax withholding.

This means that employees who have been receiving slightly higher net pay due to this temporary exemption will see their take-home pay for overtime hours worked on or after July 1, 2025, reflect the standard Alabama state income tax withholding.

We will continue to monitor any legislative developments regarding a potential extension of this exemption. In the meantime, please plan accordingly for this change to take effect at the end of June 2025