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House approves ending income tax on overtime pay

Around all the conversation this session about cutting the grocery tax, lawmakers in the House voted Tuesday to advance a proposal to eliminate another kind of tax: Overtime income.

Lawmakers from both parties commended Rep. Anthony Daniels (D-Huntsville) for the idea, which would be a first in the country. All other states impose a state tax on income earned overtime.

If passed by the Senate and signed by Gov. Ivey, hourly workers in Alabama will be keeping more money in their pocket.

“Any hour after the 40-hour mark, the state of Alabama taxes at 5%,” Daniels said.”What this bill would do is allow that 5% to go back to the employee, just the overtime only.”

Overtime is calculated at a minimum time-and-a-half the regular rate of pay. Daniels said those who are working hardest will keep that money in their pockets.

Increasing participation in the workforce is also a driving motivation for support.

“I heard from one of the employers from down in Mobile last evening that talked about how this piece of legislation will allow them to be able to save some of the employees that are going over to Mississippi to work,” Daniels said.

“This legislation will make an impact in homes across the state,” Majority Leader Scott Stadthagen (R-Hartselle) said. “This is what we’re down here for.”

“This is a very, very good Republican bill and I thank you for bringing it,” Rep. Paul Lee (R-Dothan) joked.

Daniels shot back, “This is an Alabama bill, buddy.”

Grayson Everett is a staff writer for Yellowhammer News. You can follow him on Twitter @Grayson270 for coverage of the 2023 legislative session.

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