Because Independence Day is a federal bank holiday, the Federal Reserve and commercial banks are closed. Without an adjusted payroll schedule, standard direct deposits won’t clear, delaying paychecks until the following week.
What you’ll learn
What you’ll learn
Key takeaways
- If your usual payday falls on the July 4th holiday, the federal bank closure can delay payroll.
- Plan to submit ACH payroll direct deposit information to your bank early.
- Communicate with your team so they know when to expect their direct deposit.
- Adjust your payroll platform’s settings to fit the holiday schedule.
As a new employer or a business owner looking for a refresher on holiday payroll rules, you might be wondering how the Fourth of July impacts your direct deposit timeline. This guide breaks down the steps, provides schedules you can reference, and includes a bit of holiday history.
What is Independence Day?
Independence Day, commonly known as the Fourth of July, commemorates the Continental Congress’s adoption of the Declaration of Independence on July 4, 1776. It is a patriotic holiday celebrated nationwide with fireworks, parades, and family gatherings.
When is the July 4th bank holiday observed?
Independence Day has been a federal holiday since 1870. This means that non-essential federal government offices, the post office, and the Federal Reserve are closed.
While July 4th is the official holiday, keep in mind that the observance date can shift depending on the calendar. And because July 4, 2026, falls on a Saturday, the federal banking holiday is observed on Friday, July 3.
Understanding how the July 4th bank holiday affects direct deposit
Most consumer-facing banks follow the Federal Reserve schedule. As with other summer holidays, the upcoming Independence Day observance is on Friday, July 3, 2026, so banks will be closed.
In a nutshell, the Federal Reserve moves funds between US banks through the Automated Clearing House (ACH) system. These electronic transactions are only processed on business days when the Federal Reserve is open.
Pro tip
Because the Federal Reserve pauses ACH processing on all federal holidays, paydays that fall on or immediately after a bank closure can experience delays. Running your payroll even one business day early prevents these clearing mishaps, but if your scheduled payday falls on the holiday itself, you must log in to your payroll software and advance your check date.
Because the Federal Reserve is closed on Friday, July 3, the final settlement step is paused. What does this have to do with payday? If your normal payday lands on that Friday and you don’t submit your payroll a little earlier than usual, this pause will cause a delay in your team getting paid.
Next, let’s see how you can plan ahead to avoid having payday planning fall through the cracks.
Planning your payroll run around the July 4th holiday
To be sure everyone receives their paychecks before the holiday weekend, you’ll need to adjust your payroll submission deadlines based on whether your business has a 2-day or 4-day turnaround.
Important note: Check dates scheduled for Friday, July 3 should be adjusted to Thursday, July 2, to avoid paying employees late.
Payroll submission deadlines for a 2-day turnaround
| Payday falls on | Submission deadline | Employer draft date | Check date |
| Thursday 7/2 | Tuesday 6/30 | Wednesday 7/1 | Thursday 7/2 |
| Friday 7/3 | Tuesday 6/30 | Wednesday 7/1 | Thursday 7/2 |
| Monday 7/6 | Wednesday 7/1 | Thursday 7/2 | Monday 7/6 |
| Tuesday 7/7 | Thursday 7/2 | Monday 7/6 | Tuesday 7/7 |
Payroll submission deadlines for a 4-day turnaround
| Payday falls on | Submission deadline | Employer draft date | Check date |
| Thursday 7/2 | Friday 6/26 | Monday 6/29 | Thursday 7/2 |
| Friday 7/3 | Friday 6/26 | Monday 6/29 | Thursday 7/2 |
| Monday 7/6 | Monday 6/29 | Tuesday 6/30 | Monday 7/6 |
| Tuesday 7/7 | Tuesday 6/30 | Wednesday 7/1 | Tuesday 7/7 |
| Wednesday 7/8 | Wednesday 7/1 | Thursday 7/2 | Wednesday 7/8 |
| Thursday 7/9 | Thursday 7/2 | Monday 7/6 | Thursday 7/9 |
Note: OnPay’s banking cut-off is 11:30 pm ET. Any payrolls processed after 11:30 pm ET are considered to be submitted on the next business day. The submission deadline can fall on a holiday, provided it’s before 11:30 pm ET, without affecting the payroll turnaround time.
Since Independence Day is just one of a number of federal holidays that can affect direct deposit, let’s see how you can prevent this from making an impact when each comes around.
Support that saves time
“OnPay goes above and beyond to help my business succeed. Their support group is always friendly and helpful. When we make a mistake, they’re there to bail us out, every time! We’ve missed our payroll deadline a couple of times due to holidays or mistakes, and OnPay has helped us get the payroll to our employees with no additional cost to us. They’ve been a lifesaver!”
— Tiffany Hopkins, Shactee Engineering LLC
Best practices for holiday payroll management
- Check bank deadlines: Be sure you know exactly when your provider stops accepting files. Missing the cutoff by even a few minutes can push your payroll to the next business day.
- Communicate with staff: Tell employees in advance about the adjusted check date so there are no surprises. Paying early can help keep employees happy and your inbox less flooded with emails.
- Double-check software settings: If your payday falls on a bank holiday, actively change the scheduled check date to the business day before.
Keep your holiday payroll on track with OnPay
Navigating bank closures doesn’t have to mean scrambling to adjust calendars or chasing down paperwork. OnPay’s payroll and HR platform automates the heavy lifting, making it simple to manage everything from Presidents’ Day deadlines to the Juneteenth bank holiday. If you’re ready to see how easy holiday payroll can be all year long, give us a try today — and remember, our team of experts is always here to help you navigate the calendar.
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Jon Davis is the Sr. Content Marketing Manager at OnPay. He has over 15 years of experience writing for small and growing businesses. Jon lives and works in Atlanta.