Drake Tax – AL: Overtime Exemption Act

Overtime wages received between January 1, 2024, and June 30, 2025, are excluded from gross income and Alabama state income tax. Exempt overtime wages should be reported on Form W-2, box 14, but not included in the amount in box 16.

In Drake Tax, in the first column under 14 Other, enter code EX OT and then enter the amount of exempt overtime wages in the second column.

This exemption applies to both resident and nonresident taxpayers. If the amount in Box 16 was not adjusted by the employer, the taxpayer may need a corrected Form W-2.

See the AL DOR website for details.