If enacted, HB9800 will provide financial relief to lower- and middle-income workers by allowing them to deduct a portion of their bonus income, thereby reducing their overall taxable income. This legislative proposal reflects an effort to address economic disparities by offering a tax relief mechanism particularly targeted at the working class, who often rely on bonuses as part of their total compensation. Consequently, this bill has the potential to increase disposable income among affected taxpayers, with a resulting positive impact on consumer spending.
Summary
House Bill 9800, titled the 'Working Class Bonus Tax Relief Act of 2024', aims to amend the Internal Revenue Code of 1986 by introducing a tax deduction for certain bonus amounts received by individuals. The bill establishes a deduction allowance of up to 15% of a taxpayer's non-bonus wages from the same employer for any bonuses received during the taxable year. However, this deduction is limited based on the individual's adjusted gross income, with a threshold of $100,000 for single filers, $150,000 for heads of household, and $200,000 for married couples filing jointly.
Contention
Despite its potential benefits, HB9800 has also raised points of contention among lawmakers. Critics argue that instituting such a deduction could complicate the tax code further and disproportionately favor higher-income earners who receive substantial bonuses, thus undermining the bill's objectives. Additionally, there are concerns regarding the sustainability of such tax deductions in the long run, especially in light of potential budgetary impacts on federal revenue. As the discussions surrounding this bill progress, it will be essential to weigh both its intended benefits and the possible unintended consequences.
Working Class Bonus Tax Relief Act of 2025This bill allows a tax deduction for bonuses received by an individual, subject to income limitations, through 2029. The amount of the deduction may not exceed 15% of the individual’s regular wages from the same employer. Further, the deduction is not allowed for individuals with annual adjusted gross income exceeding $100,000 (or $150,000 for heads of the household and $200,000 for married couples filing a joint return).
Overtime Pay Tax Relief Act of 2025This bill allows a tax deduction for overtime compensation received by an individual, subject to income limitations, through 2029. The amount of the deduction may not exceed 20% of the individual’s regular wages from the same employer. Further, the deduction is not allowed for an individual with adjusted gross income exceeding $100,000 (or $150,000 for a head of the household and $200,000 for a married couple filing a joint return).