In 2026, many employers utilizing a biweekly pay schedule will encounter a rare calendar anomaly. This anomaly is known as a 27th pay period. While most years consist of 26 biweekly pay dates, the alignment of the 2026 calendar will result in an additional payday. For organizations whose first payday falls on January 2, 2026, the extra payment will occur on or around December 31, 2026.
This shift occurs approximately every 11 years. It happens because 26 biweekly periods cover only 364 days. This leaves a one-day surplus that eventually accumulates into a full extra pay cycle.
Key Impacts for Employers
The presence of an extra pay period introduces several financial and compliance considerations that require proactive management.
- Salaried Exempt Overpayment: If an employer continues to pay the standard biweekly amount, salaried employees will receive an unintentional raise of approximately 3.85 percent for the year.
- Insurance Premium Deductions: Employers must decide whether to take insurance deductions from all 27 checks or skip the 27th check. Taking deductions from 27 checks requires recalculating the per-paycheck amount to avoid over-collecting annual premiums.
- Budget and Cash Flow: An additional payroll cycle can significantly increase annual labor costs and impact cash flow planning.
- Benefit and Tax Limits: Extra paychecks may cause employees to reach IRS annual contribution limits for 401(k) plans, HSAs, and FSAs prematurely. Recalculating these deductions is essential to stay within legal caps.
- Compliance with Wage Laws: Any adjustments to pay must comply with the Fair Labor Standards Act (FLSA) or state-specific salary levels. This ensures that biweekly payments do not fall below the minimum salary threshold required to maintain exempt status.
Strategies for Managing the 27th Pay Period
Employers generally choose one of the following approaches to handle the additional cycle for salaried employees:
| Strategy | Description | Impact |
| Maintain Current Pay | Continue dividing the annual salary by 26. | Employees receive 27 checks, which results in higher total annual compensation. |
| Pro-Rata Adjustment | Divide the total annual salary by 27 for the 2026 year. | Each biweekly check is slightly smaller, but the total annual salary remains unchanged. |
| Daily Rate Calculation | Calculate a daily rate by dividing the salary by 365 and pay based on 14 days. | This provides a mathematically precise conversion for the calendar year. |
Note: Hourly and non-exempt employees are typically not affected by these adjustments. They are paid based on actual hours worked during each period.
Next Steps for Employers
To ensure a smooth transition and maintain compliance, employers should take the following actions:
- Audit Your 2026 Payroll Calendar: Confirm if your organization’s pay dates result in 27 periods.
Determine Deduction Schedules: Decide if you will collect insurance premiums over 26 or 27 pay periods and coordinate with carriers.
- Update Payroll Systems: Work with your payroll provider to configure systems for 27 deductions. This ensures tax withholding remains accurate.
- Comply with Notice Requirements: Many states require advance written notice before any reduction in per-period pay takes effect. This is often required at least one full pay period in advance.
- Communicate Clearly: Inform employees well in advance about how the 27th payday will affect their take home pay and benefit contributions.
