Why does this happen?
This happens under a biweekly pay schedule, where employees are paid every two weeks. Because of how the calendar falls, a 27th paycheck typically occurs every 11 years.
In 2026, this happens because New Year’s Day is a bank holiday on Friday, January 1, 2027. As a result, the final biweekly paycheck will be paid early on Thursday, December 31, 2025. This shift causes 27 paychecks to fall within the 2026 calendar year instead of the usual 26.
Benefit Deductions
Benefit deductions will be spread across the standard 26 pay periods and will NOT be applied to the 27th paycheck, on December 31, 2026. This means this final paycheck will be larger than you’re used to seeing.
401(k) and ESPP Contributions
If enrolled, 401(k) and/or ESPP will be deducted from all 27 paychecks where you have eligible compensation, until the annual contribution limits are reached. No action is required on your part. However, we encourage you to review your 401(k) and ESPP elections on Fidelity NetBenefits to ensure they align with your annual savings goals.
Vacation Accruals
Vacation time will continue to accrue based on 26 pay periods, not 27. This ensures consistency with our standard accrual policy. Retail employees will continue to accrue time based on hours worked.
Federal and State Withholding
Microsoft will continue to withhold taxes according to the Federal W-4 and state forms currently on file. Your biweekly earnings will be taxed based upon the biweekly tax schedules set by the Internal Revenue Service and applicable state and local tax jurisdictions.
