Kerr County workshop previews comp-time policy split to preserve new overtime tax benefit

At a Kerr County Commissioners' Court workshop on March 2, 2026, Miss Holden, a Human Resources representative, proposed revising the county's comp-time policy to align with the "one big beautiful bill act" and with recent payroll-system updates. The change would keep the existing 60-hour cap but divide comp time into two tracked banks—"comp time 1.0" and "comp time 1.5"—so qualified overtime can be reported separately on employees' W-2s.

Holden said the split is intended to preserve tax benefits available under the federal change: "The employees can deduct $12,500 if they file individually or up to $25,000 married filing jointly, but it only applies to the qualified overtime pay," she said, characterizing the deduction as tied to the 0.5 portion of time-and-a-half overtime. To ensure employees realize that benefit, Holden proposed that payouts for comp-time balances exceeding the 60-hour cap draw from the 1.5 bank first so the portion that qualifies for the deduction is paid and reported.

Using a 42-hour workweek as an example, Holden explained how two overtime hours convert to three banked hours under time-and-a-half accruals and why tracking those hours separately matters for reporting. "If we have to pay them for ... two hours that are overtime, you're going to be able to get two hours, three hours for every two that you work off," she said, describing how the payroll system now records those accruals into distinct buckets.

Tracy, who walked through screenshots of the time-entry system, showed employees how to designate comp-time earned at 1.0 or 1.5 and how the interface displays leave balances. Holden said guidance and examples will be distributed to staff so employees know how to enter time and how usage and payouts will be handled.

County officials asked whether the split would change the county's liability or cash flow. In response, Holden and other staff said the proposal does not increase liability or alter cash flow because the two banks will be added together for the existing 60-hour cap and payouts will reflect the same total hours paid as under the current single bank. "It's not going to change the county's liability at all," one staff member said.

Holden recommended adopting the revised policy language and said she will present the clean, non-redlined version to the Commissioners' Court for formal approval next Monday. The workshop did not include a vote; participants agreed there was no further discussion and the meeting was adjourned.

Implementation notes: the change is administrative and aims to reduce manual payroll calculations, improve W-2 reporting accuracy, and preserve employee tax benefits. Staff said employees will be advised on when to use comp time 1.0 (recommended first for time off) versus comp time 1.5 (preserved for payout and the associated tax deduction).