Payroll Leap Years: What Employers Need to Know

Every few years, the calendar does something that quietly disrupts payroll teams everywhere: it creates a year with more paydays than usual. And with 2026 and 2027 on the horizon, many employers on a biweekly schedule will start noticing that their pay calendars may include 27 pay periods instead of the usual 26.

While this is not a crisis, it is something worth planning for, especially for small and mid-sized employers where budgeting, forecasting, and cash flow are closely connected.

Why This Happens

Biweekly payroll follows a simple rhythm: pay employees every 14 days. Most years, that cycle results in 26 paychecks.

But the calendar never divides perfectly into 14-day increments. Every so often:

• A leap year adds an extra day

• The way the weekdays fall creates 53 occurrences of a specific day of the week

• And that combination pushes an additional payday into the year

This is why some employers will see 27 pay dates in 2026, 2027, or both, depending on their established Friday or Thursday payroll cycle. A 27-pay-period year does not change legal requirements, but it does impact how you process and plan for payroll. Here’s what to consider.

Budgeting and cash flow

An extra payroll run means one more set of wages, taxes, and employer-paid benefits. Look ahead at your 2026 and 2027 calendars so this additional cycle doesn’t catch your organization off guard.

Salaried employees and annualized pay

Employers generally choose one of two approaches:

• Keep paychecks the same, which increases the employee’s total annual pay that year

• Adjust per-period pay so the total annual salary remains consistent

Most employers keep paychecks the same to avoid confusion and to ensure exempt employees stay above minimum salary thresholds.

Either approach is allowable as long as:

• It doesn’t reduce pay below federal or state minimums

• It doesn’t conflict with a contract or offer letter guaranteeing a specific per-period amount

Hourly employees

Hourly, nonexempt employees are paid for the hours they work. An extra pay period does not change that, it simply creates another payroll cycle to process.

Payroll system readiness

Double-check that your payroll software recognizes 27-pay-period years and calculates taxes, deductions, and benefit premiums accurately. If your deductions are split by pay period, you may need to make adjustments to avoid under- or over-withholding.

Health benefit deductions

Many employers who pay on a biweekly pay schedule deduct benefits 26 times per year (each paycheck). When a 27th paycheck appears in the year, those same deductions may not align with your plan documents or the annual total. Some employers may choose to adjust the per-pay amount or decide to skip the deduction on one cycle. There is no one right way to handle it, but it is worth looking at your current setup, your carrier’s rules, and what will create the clearest experience for employees before the year begins.

401(k), HSA, FSA considerations

Employees who set their 401(k), HSA, and FSA contributions to “max out” based on 26 pay periods may hit their annual limit earlier than expected in a 27-pay-period year. Your payroll system may have a way to add a “not to exceed” amount which can help prevent employees from over contributing. Encourage employees to review their elections ahead of time and consider whether they want to make adjustments.

Employee communication

Even if nothing about their individual pay is changing, employees may notice one more paycheck in the year and they will have questions. A brief message explaining why the calendar creates an extra payday can go a long way in preventing confusion.

Looking Ahead

A 27-pay-period year is completely normal, predictable, and manageable with early planning. Reviewing your upcoming payroll calendars now, especially for 2026 and 2027, helps you budget accurately, adjust deductions if needed, and provide clear guidance to your team.

If you would like help reviewing your pay schedules or identifying the best approach for your organization, our consulting team can walk you through your options and help you prepare before year-end.