How Often Are There 27 Pay Periods in a Year?

Bi-weekly pay is a common arrangement where employees receive payment every two weeks. While a typical year includes 26 bi-weekly pay periods, some years contain an additional 27th pay period. This occasional occurrence results from how calendar days align and has implications for both employers and employees.

The Mechanics of Bi-Weekly Pay

Understanding the occurrence of a 27th pay period involves differentiating between bi-weekly and semi-monthly pay schedules. Bi-weekly pay means employees are paid every two weeks, typically on a fixed day such as every other Friday, resulting in 26 pay periods over a standard year. In contrast, semi-monthly pay involves receiving wages twice a month, usually on specific dates like the 1st and 15th, leading to 24 pay periods annually. The consistency of bi-weekly paydays on the same weekday differs from semi-monthly pay, where the payday can shift depending on the calendar.

A standard year has 365 days, and a bi-weekly pay period spans 14 days. Dividing 365 by 14 yields 26 with a remainder of 1 day. In a leap year, with 366 days, dividing by 14 results in 26 with a remainder of 2 days. These extra one or two days accumulate over time, eventually adding up to a full 14-day pay period. This accumulation, combined with the specific day of the week on which the first pay period of the year falls, leads to a year having 27 bi-weekly pay periods.

Frequency of the 27th Pay Period

A year with 27 bi-weekly pay periods occurs approximately every 5 to 6 years. This is a predictable cycle stemming from the slight mismatch between the number of days in a year and a perfect 26-period bi-weekly schedule. The “extra” days from each year gradually build up until they form a complete 14-day pay period.

For example, 2015 and 2020 were years that included 27 bi-weekly pay periods for many employers. The next occurrence is anticipated around 2026 or 2031, depending on the specific payroll start date and how the calendar aligns. Leap years add an extra day, slightly altering the precise timing, but do not fundamentally change this recurring pattern.

Managing the 27th Pay Period

The occurrence of a 27th pay period requires planning for both employers and employees. For employers, particularly those with salaried employees, this means budgeting adjustments. Annual salaries are typically divided by 26 pay periods, so a 27th period can result in an unbudgeted expense if not accounted for. Employers may choose to pay the additional check at the employee’s regular rate, or they might prorate the annual salary across 27 pay periods, resulting in slightly smaller individual checks. Clear communication with employees about the chosen approach is important to avoid confusion or dissatisfaction regarding paycheck amounts.

The 27th pay period can also affect payroll tax calculations and benefit deductions. For instance, employees might reach their Federal Unemployment Tax Act (FUTA) and State Unemployment Insurance (SUI) wage bases earlier in the year due to the increased total wages paid. FUTA taxes apply to the first $7,000 of an employee’s wages, and SUI wage bases vary by state but are often higher. The employer’s portion of Social Security and Medicare taxes (FICA) also continues to be withheld from each paycheck, potentially accumulating to a higher total for the year for the employee. Employers also need to monitor employee contributions to accounts like 401(k)s, Health Savings Accounts (HSAs), and Flexible Spending Accounts (FSAs) to ensure annual limits are not exceeded.

For employees, a 27th pay period translates to an “extra” paycheck within the calendar year. While this can be a welcome financial boost, it is beneficial for individuals to consider this when planning their annual budget. This additional income can be directed towards savings, debt reduction, or other financial goals. Employees should be aware that if their employer prorates the annual salary over 27 periods, individual paycheck amounts will be slightly lower throughout the year, even though the total annual salary remains constant.