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
New overtime wage types have been created to pay and report qualified overtime as defined in H.R. 1 (OBBBA).
HR1 OT 2.5 (4051) (Wage Type 1476)
This wage type is used to report the premium portion of overtime compensation, so 1/5 of the wages associated with this new wage type will be reported on the form W-2, payable to overtime eligible employees after exceeding 40.0 regular hours worked in their work week (regular hours do not include paid leave or holiday hours).
HR1 OT shft1 2.0 (4051) (Wage Type 1442)
This wage type is used to report the premium portion of overtime compensation, so 1/4 of the wages associated with the wage type will be reported on the W2, payable to overtime eligible employees after exceeding 40.0 regular hours worked in their work week (regular hours do not include paid leave or holiday hours).
HR1 OT FLSA Premium (Wage Type 1463)
This wage type is used to report the premium portion of overtimecompensation, payable to overtime eligible employees after exceeding 40.0 regular hours worked in their work week (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 as defined in H.R.1 (OBBBA).
Comp Time Earned
The new compensatory time wage types have been created to track qualified comp time as defined in H.R.1 (OBBBA).
HR1 Comp Time Earned 1.5x (Wage Type 1444)
This wage type is used to record compensatory time earned at a 1.5 rate. This accrued time is stored in the Absence Quotas (Infotype 2006) as Absence Quota Type 53 – HR1 Compensatory Time. The new HR1 Absence Types listed below will deduct from Quota Type 53.
Comp Time Taken
New compensatory time absence types have been created to deduct from Absence Quota Type 53.
HR1 Comp Time Taken (Absence Type 9068)
This absence type is used to record and deduct compensatory time from Absence Quota Type 53 – HR1 Compensatory Time. Absence Type 9068 HR1 Comp Time Taken will process with the system generated wage type 1438 in payroll and displayed on the earning statement.1/3 of these wages paid will be reported on the W-2 Box 12 TT.
HR1 Comp Sup Ben PFML (Absence Type 9067)
This absence type is used to record and deduct compensatory time from Absence Quota Type 53 – HR1 Compensatory Time Earned as supplemental PFML. Absence Type 9067 HR1 Comp Sup Ben PFML will process with generated wage type 1478 in payroll.1/3 of these wages paid will be reported on the W-2 Box 12 TT.
HR1 Comp Time Payout (Compensation Method 9017)
This compensation method is used to process cash-out of compensatory time from Absence Quota Type 53 – HR1 Compensatory Time. Compensation Method 9017 Comp Time Cashout for HR1 Comp Time will process with generated wage type 1493 in payroll.1/3 of these wages paid will be reported on the W-2 Box 12 TT.
Absence Types 9068 and 9067 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 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.
