The Alabama state income tax exemption applicable to overtime wages expired on June 30, 2025.  Any amounts paid or received as overtime compensation are now 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.

For more information about the overtime exemption, click the link below.

https://www.revenue.alabama.gov/individual-corporate/overtime-pay-exemption-amended/