Switching from exempt to nonexempt status typically does not directly impact tax withholdings or deductions, however, due to recent Alabama state legislation, overtime wages are now exempt from Alabama state tax withholding for nonexempt biweekly employees. This "**AL OT Exempt Wages" amount can be found under the Hours and Earnings section of your pay slip and displays as a negative amount since it is a reduction of taxable wages.
Please note that the reduction in total gross pay is only for the purpose of reducing Alabama state taxable wages. It does not reflect a reduction in actual amounts paid, nor does it impact gross pay for Federal, FICA, or local tax withholding, or pre-tax or after-tax deductions.
It is a good idea to review your tax withholding elections when any significant changes occur in your employment status or compensation. This includes transitioning from exempt to nonexempt status. You may want to adjust your withholding allowances on Form W-4 (for federal taxes) and equivalent state tax withholding forms to ensure that the appropriate amount of taxes is withheld from your paycheck. You can accomplish this using Oracle Self Service: Employee Compensation Information.
Overall, while the transition from exempt to nonexempt status may not directly trigger changes to tax withholdings or deductions, it is essential to be aware of potential indirect effects and take proactive steps to review and adjust your tax-related decisions as needed.