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The 2026 Payroll Anomaly: 5 Critical Things To Know About The Extra Pay Period (And Your 27th Paycheck)

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For millions of employees and payroll professionals, the 2026 calendar year holds a rare and significant financial surprise: an extra pay period. This phenomenon, often referred to as a "27th payday," only occurs approximately every 11 to 12 years for companies operating on a specific bi-weekly payroll schedule, and for those affected, it necessitates immediate budgeting and deduction adjustments. As of today, December 20, 2025, the time for employers to plan for this payroll anomaly is now, as the financial impact on annual budgets and employee benefits is substantial and cannot be ignored.

This extra pay period in 2026 is not a bonus or a mistake; it is a simple consequence of calendar math. A standard year has 52 weeks, which perfectly accommodates 26 bi-weekly pay periods (52 weeks / 2 weeks per period = 26 periods). However, 2026 has 365 days, and if the first payday lands on the very first working day of the year, the remaining 364 days will allow for one additional, 27th payday to fall within the calendar year before the clock resets for 2027.

The Essential Payroll Calendar: Who Gets the 27th Paycheck in 2026?

The extra pay period is not universal. It only impacts employees who are paid on a bi-weekly schedule and whose company’s first payday of the 2026 calendar year falls on a specific date. Employees paid on a weekly, semi-monthly, or monthly schedule will experience their standard number of pay periods.

The Trigger Date: Friday, January 2, 2026

If your company’s bi-weekly payroll schedule dictates that the first payday of 2026 is Friday, January 2, 2026, you will receive 27 paychecks by the end of the year. This specific calendar alignment ensures that the final payday will occur on Thursday, December 31, 2026, completing the 27th cycle.

  • Bi-Weekly Payroll (Standard): 26 Pay Periods (Most common scenario)
  • Bi-Weekly Payroll (Anomaly): 27 Pay Periods (If first check is Jan 2, 2026)
  • Semi-Monthly Payroll: 24 Pay Periods (Unaffected)
  • Weekly Payroll: 52 Pay Periods (Unaffected, though 53 is possible in other years)

The Two "Three-Paycheck Months" of 2026

For employees on the 27-paycheck schedule, 2026 will feature two months where you receive three paychecks instead of the usual two. These are the months that will see a temporary boost to your monthly cash flow, a phenomenon often referred to as a "three-paycheck month."

Based on the January 2, 2026 start date, the two months with three paydays are:

  1. January 2026: Paychecks on January 2, January 16, and January 30.
  2. December 2026: Paychecks on December 4, December 18, and December 31.

This is a welcome surprise for personal finance and budgeting, but it is a critical point of concern for employers who must manage the financial implications of this extra payroll cycle.

Impact on Salaries: The Employer's Budgeting Dilemma

The extra pay period creates a significant, though temporary, financial challenge for employers and a crucial question for salaried employees: Will my annual salary be divided by 26 or 27?

For salaried employees, annual salary is typically divided by 26 to determine the bi-weekly paycheck amount. In a 27-paycheck year, continuing this practice means the employer will pay out an extra paycheck, increasing the total annual payroll cost for that employee by approximately 3.85% (1/26th of the total salary).

Employers generally have two options for handling this:

  1. Absorb the Cost: Most employers choose to pay the 27th paycheck at the standard rate. This is the simplest approach for employee morale and administrative ease, but it requires the company to budget for the nearly 4% increase in total payroll expenses for the year.
  2. Adjust the Pay Rate: A less common, but legally viable, option is to inform salaried employees that their annual salary will be divided by 27 instead of 26 for the 2026 calendar year. This ensures the company pays exactly the agreed-upon annual salary, but the bi-weekly paycheck amount will be slightly lower (by about 3.7%), which can cause employee confusion or dissatisfaction.

The Critical Challenge: Benefit and 401(k) Deductions

The most complex aspect of the 27th payday is managing employee deductions, including health insurance premiums, Flexible Spending Account (FSA) contributions, and 401(k) retirement savings.

Most annual benefit costs—such as health insurance premiums—are spread over 26 pay periods. If the company continues to deduct the standard amount for 27 pay periods, employees will over-contribute for the year. This is a major compliance risk and a headache for both HR and the employee.

Key Deduction Strategies for Employers:

  • Health/FSA Premiums: The best practice is to suspend the deduction for the 27th paycheck (likely the one on December 31, 2026). This ensures the employee pays the correct annual premium amount and receives a higher net pay on that final check.
  • 401(k) Contributions: This is more complicated.
    • Percentage-Based Deductions: If an employee contributes a fixed percentage (e.g., 5%), they will simply contribute more money over 27 checks. They must be careful not to exceed the annual IRS contribution limit (the limit for 2026 is TBD, but was $23,000 in 2024).
    • Fixed-Amount Deductions: If an employee contributes a fixed dollar amount per check, they will also over-contribute. They must manually adjust their contribution for the final pay periods to avoid exceeding the annual limit.
  • FICA Taxes: Social Security and Medicare taxes (FICA) will be deducted from all 27 paychecks. This is not an issue, as the Social Security wage base limit will automatically cap the Social Security tax, while Medicare tax continues indefinitely.

Communication is Key: HR's Role in Managing the Anomaly

The primary advice from payroll experts and HR professionals is to communicate early and clearly. Employees who are not prepared for the change may be confused by their slightly reduced paychecks (if the company chooses option 2) or by the sudden suspension of their benefit deductions at year-end.

A Checklist for HR and Payroll Teams:

  1. Confirm the Schedule: Verify that your bi-weekly schedule starts on Jan 2, 2026, and will indeed result in 27 pay periods.
  2. Decide on Salaried Pay: Determine if the annual salary will be paid over 26 or 27 checks.
  3. Adjust Deductions: Plan to suspend annual deductions (Health, FSA, etc.) on the 27th check to prevent over-collection.
  4. Inform Employees: Send out a detailed communication in late 2025 or early 2026 explaining the 27th payday, the two three-paycheck months, and the critical need for employees to review their 401(k) contribution limits to avoid over-contributing.

By proactively managing the 2026 payroll anomaly, employers can ensure compliance, maintain accurate payroll records, and transform a potential administrative headache into a positive event for their employees.

The 2026 Payroll Anomaly: 5 Critical Things to Know About the Extra Pay Period (And Your 27th Paycheck)
Is there an extra pay period in 2026?
Is there an extra pay period in 2026?

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  • Name : Filiberto Schultz
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  • Phone : 440.492.5665
  • Company : Rodriguez-Medhurst
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