If enacted, HB 3118 would directly impact the taxation of overtime income, providing a financial break for employees who work overtime. The bill also stipulates that the deduction would phase out for individuals making more than $100,000 and couples making over $200,000, which aims to target the benefits toward middle-income earners. By allowing this deduction, the bill aligns with ongoing efforts to support workers financially, particularly those in lower-wage positions who may depend on overtime to make ends meet.
Summary
House Bill 3118, known as the 'No Tax on Overtime Act,' proposes an amendment to the Internal Revenue Code to allow a tax deduction for qualified overtime compensation received by taxpayers. This legislation is aimed at alleviating the tax burden on workers who earn overtime pay, which is often a significant part of their overall income. Under the provisions of the bill, individuals would be eligible for a deduction for overtime compensation up to a limit of 300 hours in a taxable year, which could help improve the financial situation of many workers who rely on overtime for additional income.
Contention
The introduction of HB 3118 may raise contentions, particularly concerning its implications for federal tax revenue. Critics may argue that the deduction could lead to a decrease in government revenue, complicating budget planning, especially in periods of economic uncertainty. Furthermore, there may be debates on whether the income threshold for eligibility is appropriate or if it excludes essential workers who work overtime but do not reach these income levels, potentially limiting the bill's effectiveness in assisting those who need it most.