This article is for Alabama employers with admin permissions who pay full-time hourly employees overtime wages.
Beginning January 1, 2024, Alabama exempted overtime pay from gross income for full-time hourly employees who worked more than 40 hours in a week. The exemption applied from January 1, 2024, to June 30, 2025. As of July 1, 2025, Alabama taxes overtime wages again (per current legislation, subject to change).
This exemption also came with employer reporting requirements to the Alabama Department of Revenue (DOR). Employers needed to:
Report the total aggregate amount of overtime paid, and
Report the total number of employees who got overtime pay
We handle reporting for 2024 and beyond. You should have submitted a one-time report with historical 2023 overtime data by January 31, 2024, outside of Gusto. For more information, read about the Alabama Overtime Exemption. For questions about the tax or reporting requirements, email the Alabama DOR at [email protected].
You should have submitted your one-time “Report of Historical 2023 Overtime Data” directly to the Alabama DOR by January 31, 2024. You needed to wait until the agency got your 2023 end-of-year forms before submitting. We expected our end-of-year filings to reach the agency by January 17.
Keep in mind:
You still needed to report, even if you had no overtime wages in 2023.
We did not support the historical 2023 reporting requirement, but we handle all monthly and quarterly reporting requirements for 2024 and beyond.
You can run two reports in Gusto to meet the 2023 overtime data report requirement: one showing the total aggregate amount of overtime paid and another showing the total number of employees who received overtime.
Use the Payroll journal report in Gusto to gather the data you need for the Alabama DOR reporting requirement.
To generate a report with the total aggregate amount of overtime paid in 2023:
Go to Reports.
Find the Payroll journal report and click it.
You can typically find this report in the Frequently used section at the top of the page.
Make the following selections:
Report sections: Choose Summary only from the dropdown.
What would you like this report to contain? Select:
Employee earnings breakdown
Employee Tax Breakdown
Detailed totals
When and who should be included?
Date range: Annually
Year: 2023
Select employees: Hourly employees
Important: This report includes all hourly employees. You need to manually exclude wages from non-full-time hourly employees.
How would you like this data grouped?
Group by: State
Select your preferred report format (either CSV or PDF).
Click Generate report.
To read the report, scroll to the Alabama section and find the Totals section. Overtime totals appear in different locations based on how you downloaded the report:
PDF: Look for the Total of the Overtime column.
This column will not exist if there was no overtime. You still need to report even when you had no overtime wages.
CSV: Look for the Overtime (Amount) column.
Keep in mind:
Do not include paid time off and holiday pay when you determine the hours worked over 40 hours. This type of pay does not count as hours worked.
The withholding exemption does not apply to commissions and bonuses paid in addition to an hourly wage.
We recommend double-checking your overtime wages and employee counts against your own company records or those of a previous payroll provider, if needed.
If you entered historical payrolls when you onboarded with Gusto, we did not separate overtime wages, so you need to check the original wage reports to find them.
Use the Payroll journal report in Gusto to gather the data you need for the Alabama DOR reporting requirement.
To generate a report with the total number of employees who received overtime pay in 2023:
Go to Reports.
Find the Payroll journal report and click it.
You can typically find this report in the Frequently used section at the top of the page.
Make the following selections:
Report sections: Choose Summary only from the dropdown.
What would you like this report to contain? Select:
Employee earnings breakdown
Employee Tax Breakdown
Detailed totals
When and who should be included?
Date range: Annually
Year: 2023
Select employees: Hourly employees
Important: This report includes all hourly employees. You need to manually exclude wages from non-full-time hourly employees.
How would you like this data grouped?
Group by: Employee
Select your preferred report format (either CSV or PDF).
Click Generate report.
To find the number of employees with overtime wages, manually count the full-time employees who had overtime wages subject to Alabama withholding. Look for Alabama income tax in the Employee taxes section.
Use the Alabama DOR’s FAQ resource to determine which types of hourly employees to include.
Keep in mind:
If you run payroll in multiple states, do not count employees subject to another state’s withholding, unless they also had Alabama state income tax withheld.
We recommend double-checking your overtime wages and employee counts against your own company records or those of a previous payroll provider, if needed.
If you entered historical payrolls when you onboarded with Gusto (or any non-Gusto payroll), we did not separate overtime wages, so you need to check the original wage reports to find them.
You had two ways to submit your “Report of Historical 2023 Overtime Data” to the Alabama DOR: through your My Alabama Taxes account or by email. You should have submitted by January 31, 2024, after our end-of-year filings reached the agency by January 17.
You needed to report:
The total aggregate amount of overtime paid, and
The total number of employees who got overtime pay
To submit your historical overtime data through My Alabama Taxes:
Send a message through the portal with the two pieces of information from the reports.
An agent from the DOR will review your message and help update your account.
Email [email protected] with:
Your Alabama withholding tax account number, and
Your historical 2023 overtime pay information from the two reports you generated above
Starting in 2024, we sent monthly and quarterly reports to the Alabama DOR that included:
The aggregate amount of overtime paid during the period (month/quarter), and
The total number of full-time hourly employees who got overtime pay
We submitted this information along with your Withholding Tax Return. There was no additional information for you to submit.