In response to the “no tax on overtime” provision of H.R. 1 (OBBBA), OFM has added new wage types in HRMS. These wage types will be effective 12/16/2025 for agencies to use retroactively for the 2026 tax year.

HR1 Holiday OT (Wage Type 1498)

This wage type is for the compensation payable to overtime eligible employees who work on a holiday and exceed 40.0 regular hours worked in their work week (regular hours do not include paid leave or holiday hours).

HR1 Hol OT Prem (Wage Type 1497)

This wage type is for the premium portion of compensation payable to overtime eligible employees who work on a holiday and exceed 40.0 regular hours worked in their work week (regular hours do not include paid leave or holiday hours).

HR1 Hol OT 28 day 92.9 (Wage Type 1406)

This wage type was created to report H.R.1 qualified overtime worked on a holiday for employees with a 28-day cycle who work over 171 regular hours. There is no system generated WT to report the premium portion of compensation, so 1/3 of the wages associated with this new wage type will be reported on the W-2 Box 12 TT. (regular hours do not include paid leave or holiday hours).

HR1 OT 28day 92.9 (Wage Type 1436)

This wage type was created to report H.R.1 qualified overtime for employees on a 28-day cycle who work over 171 regular hours. There is no system generated wage type to report the premium portion of compensation, so 1/3 of the wages associated with this new wage type will be reported on the W-2 Box 12 TT. (regular hours do not include paid leave or holiday hours).

HR1 OT 28day 86.9 (Wage Type 1435)

This wage type was created to report H.R.1 qualified overtime for employees on a 28-day cycle who work over 171 regular hours. There is no system generated wage type to report the premium portion of compensation, so 1/3 of the wages associated with this new wage type will be reported on the W-2 Box 12 TT. (regular hours do not include paid leave or holiday hours).

The 2026 W-2 form has not yet been released by SAP. Therefore, reflecting the new wage types as part of W-2 Box 12TT will be included in the 2026 year-end activities and communicated through the year-end process.

OFM Statewide Accounting has added a Wage Type crosswalk to the HR1 OT Wage Type Scenarios tool for agency use. Please visit the OFM website under Statewide Accounting > Payroll to access and review the HR1 OT Wage Type Scenarios tool.

Additional information:

• SWA will host a Personnel/Payroll Association meeting on 4/22/26. Register at:  Personnel/Payroll Association Meeting - Office of Financial Management.
• Previous OFM communications for H.R. 1 (OBBBA) can be found on the HRMS Support Hub.
•  Additional wage types to track qualified overtime are still under development and will be communicated soon.
• As a reminder, agencies should never provide tax advice to employees.
• This communication was sent to the OFM GovDelivery HRMS Communications topic.