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.
Overtime Wage Types
HR1 Fire Duty OT (Wage Type 1439)
This wage type is for the compensation payable to overtime eligible employees after exceeding 40.0 regular hours worked in their work week while participating in fire suppression duties under the Incident Command System (regular hours do not include paid leave or holiday hours).
HR1 Fire Duty OT Prem (Wage Type 1420)
This wage type is for the premium portion of compensation payable to overtime eligible employees after exceeding 40.0 regular hours worked in their work week while participating in fire suppression duties under the Incident Command System (regular hours do not include paid leave or holiday hours).
Compensatory Time Wage Types
New compensatory time wage types have been created to pay and report qualified comp time at two times the rate as defined in H.R.1 (OBBBA).
Comp Time Taken
New compensatory time absence types have been created to deduct from Absence Quota Type 54.
HR1 Comp 2x Taken (Absence Type 9087)
This absence type is used to record and deduct compensatory time from Absence Quota Type 54 – HR1 Compensatory Time. Absence Type 9087 HR1 Comp 2x Taken will process with the system generated wage type 1486 in payroll and displayed on the earning statement. This is only for agency 4051. 1/4 of these wages paid will be reported on the W-2 Box 12 TT.
HR1 Comp 2x Sup Ben PFML (Absence Type 9088)
This absence type is used to record and deduct compensatory time from Absence Quota Type 54 – HR1 Compensatory Time Earned as supplemental PFML. Absence Type 9088 HR1 Comp 2.0 Sup Ben PFML will process with the system generated wage type 1488 in payroll. This is only for agency 4051. 1/4 of these wages paid will be reported on the W-2 Box 12 TT.
HR1 Comp Time Payout 2.0 (Wage Type 1484)
This wage type is generated to cashout comp time earned from the Absence Quota Type 54 – HR1 Compensatory Time 2.0,This is only for agency 4051. 1/4 of these wages paid will be reported on the W-2 Box 12 TT.
This compensation method is used to process cash-out of compensatory time from Absence Quota Type 53 – HR1 Compensatory Time. Compensation Method 9018 HR1 WSP CompPyout NotSubj will process with generated wage type 1489 in payroll. This is only for agenc 2250. 1/3 of these wages paid will be reported on the W-2 Box 12 TT.
Absence Types 9087 and 9088 will be available for use with the following entry options:
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 developed 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.
This is the last known set of updates to HRMS related to H.R.1. Agencies should begin making their retroactive updates for the 2026 tax year.
Additional information:
Previous OFM communications for H.R. 1 (OBBBA) can be found here.
As a reminder, agencies should never provide tax advice to employees.
This communication was sent to GovDelivery HRMS Communications topic.
