Bill > SB0125

This bill amends Michigan's Income Tax Act to create a new tax deduction for overtime compensation beginning in tax year 2026. Specifically, the bill allows individual taxpayers to deduct, from their taxable income, the amount of overtime compensation they were required to be paid by their employer under section 4a of the Improved Workforce Opportunity Wage Act. The bill accomplishes this by adding a new subsection (ee) to section 30 of the Income Tax Act, which details tax deductions, and by adding a new definition of "overtime compensation" to the definitions section (section 701). Additionally, the bill requires employers to delineate the amount of overtime compensation paid on their annual tax returns and withholding statements starting in 2026, and modifies employer withholding calculations to account for overtime compensation deductions. The purpose appears to be providing a tax benefit to workers who earn overtime pay, potentially offering some financial relief to employees who work extra hours. The changes will take effect for tax years beginning on or after January 1, 2026.

Budget and Finance

https://legislature.mi.gov/Bills/Bill?ObjectName=2025-SB-0125