Alabama House Bill HB467

Alabama 2025 Regular Session

• Introduced: 3/20/25
• Refer: 3/20/25

Caption

Taxation; to amend 40-18-14, Code of Alabama 1975, relating to overtime compensation

Impact

If enacted, HB 467 would alter the state's income tax structure by ensuring that overtime compensation remains exempt, which could lead to significant changes in how income is calculated for tax purposes. Additionally, the bill mandates that the Department of Revenue and the Alabama Commission on the Evaluation of Services conduct a study to assess the economic impact of this exemption. The findings from this study are expected to be made public, providing transparency regarding the implications of the exemption on state finances and economic behavior.

Summary

House Bill 467, introduced to amend Section 40-18-14 of the Code of Alabama, focuses on the taxation of overtime compensation. The bill seeks to remove the sunset provision that currently allows overtime payments to be excluded from gross income calculations only until June 30, 2025. By eliminating this provision, the bill aims to make the exemption permanent for amounts paid as overtime compensation under the Fair Labor Standards Act. This change is significant as it can affect the tax liability of many workers who receive overtime payments.

Contention

Though the bill is presented as a beneficial adjustment for workers and businesses that offer overtime, there may be points of contention regarding its long-term impact on state revenue. Supporters argue that keeping the exemption will foster higher wage retention for hourly workers, ultimately benefiting the economy through increased consumer spending. On the other hand, critics may voice concerns about the potential loss of tax revenue for the state given the broad applicability of overtime compensation, raising questions about how this would impact funding for public services.