I came across an article by a CPA group on this topic, which caught my attention. Turns out that in 2026, if you paid the first check of the year on January 2nd, you’ll start 2027 with a January 1st check date, which is a bank holiday. If you choose to run this payroll on December 31, 2026, bi-weekly payers could end up with 27 weeks, and weekly payers could end up with 53 checks.
For salaried workers, this could mean that their pay in 2026 exceeds their annual salary. It would be considered an overpayment, not a change in the base pay, but there are other implications.
This ‘extra’ check could impact Flexible Spending Accounts (FSA), Health Savings Accounts (HSA), and retirement contributions, especially those who push to the deduction limits.
For the employer, if you have an overhead budget, this extra pay period means you will exceed the budget, which might impact commissions and bonuses.
Turns out you have a few options. You can do nothing and allow employees to receive that extra salary pay; you can adjust the salary for 27 (bi-weekly) or 53 (weekly) pay periods which will lower the regular weekly salary but result in the right annual amount; or you can do a mid-year correction to salary amounts so the yearend result doesn’t exceed the salary.
If you choose to do any adjustments, check in with your state which may have laws about advanced written notice and communication steps. If you choose not to do an adjustment, you might look at some of those pay calcs and be sure you have them flagged with Max Dollar defaults and amounts so no one accidentally exceeds the 2026 limits. – CMW