The current law in effect in Alabama that exempts amounts paid to non-exempt employees as overtime compensation is expiring June 30, 2025. As of July 1, 2025, eligible employers must withhold state income tax from any FLSA overtime wages paid to non-exempt employees.
A bill has been proposed in the state legislature that would make the OT tax exemption permanent. Keep an eye out for additional details regarding this bill.
This article is informational and does not constitute legal or financial advice. Consult with an employment lawyer or accountant for additional clarification on how these changes impact your company.
