What Years Have 27 Bi-Weekly Pay Periods?

Bi-weekly pay periods are a common way for employers to compensate their workforce, with paychecks issued every two weeks. While most years contain 26 bi-weekly pay periods, certain calendar years will unexpectedly have a 27th pay period. This occasional occurrence results from the mismatch between a calendar year’s length and the consistent two-week payroll cycle.

Understanding the Payroll Cycle

A calendar year consists of 365 or 366 days (in a leap year). A bi-weekly pay period spans 14 days. When a year’s days are divided by 14, the result is not a perfect whole number. For instance, 365 days divided by 14 equals approximately 26.07 pay periods; 366 days divided by 14 equals about 26.14. These small fractional remainders accumulate, eventually creating enough days for an additional, 27th pay period.

The exact timing of this extra pay period depends on when a company’s first payday of the year falls. If the first payday occurs early in January, the subsequent 26 bi-weekly cycles may leave enough remaining days for a 27th payday before the year concludes.

Pinpointing 27-Pay Period Years

The phenomenon of 27 bi-weekly pay periods occurs approximately every 5 to 11 years, depending on the pay date. For example, 2015, 2020, and 2021 saw 27 bi-weekly pay periods for many employers. Looking ahead, 2027 is projected to be another such year for organizations that pay employees on Fridays.

To determine if a year will have 27 pay periods for a company, examine the calendar and the company’s established pay date. If the first payday falls on January 1st or 2nd, it significantly increases the likelihood of a 27th pay period by year-end. Payroll systems can indicate when these extra pay periods will happen, allowing employers to plan accordingly.

Employee Financial Considerations

For employees, an extra paycheck in a 27-pay period year influences personal financial management. Individuals who budget based on 26 paychecks may find themselves with an unexpected increase in annual gross income. This additional income offers an opportunity for increased savings, accelerated debt repayment, or discretionary spending.

The extra pay period also impacts tax withholding. While an individual’s overall annual tax rate does not change, more income is earned and thus more federal and state income tax will be withheld over the year.

Those contributing to retirement plans like a 401(k) or similar accounts with annual contribution limits should review their contribution elections. If contributions are calculated based on 26 pay periods, an employee might reach the annual maximum early, potentially missing out on employer matching contributions for later pay periods. Adjusting the per-pay-period contribution amount for 27 periods ensures contributions are spread evenly and matching funds are maximized throughout the year.

Employer Payroll Planning

Employers face considerations when a 27-pay period year occurs. Careful budgeting is necessary, particularly for salaried employees. If a salaried employee’s annual pay is divided by 26 to determine each bi-weekly paycheck, paying them for 27 periods at the same rate would result in them receiving more than their agreed-upon annual salary.

For instance, an employee with a $52,000 annual salary receives $2,000 per bi-weekly check. In a 27-pay period year, continuing this rate would mean a total payout of $54,000.

Employers have options to manage this. One approach is to continue paying the regular bi-weekly amount, accepting the increased total compensation for the year. Another is to adjust the per-pay-period amount for salaried employees by dividing their annual salary by 27 instead of 26 for that specific year. This results in slightly smaller individual paychecks but ensures the total annual salary remains consistent with the original agreement.

Regardless of the chosen method, clear communication with employees is important to manage expectations and address concerns about paycheck changes. Additionally, employers must account for increased payroll tax liabilities, such as the employer’s portion of Social Security and Medicare taxes, which will be higher due to increased total gross wages.