Bill > HB1822

This bill creates the "Overtime but not Overtaxed Act," which provides a tax exemption for overtime compensation in Arkansas. Specifically, the bill defines "overtime" as hours worked in a workweek that exceed 40 hours and are required to be compensated under the Fair Labor Standards Act (FLSA) as of January 1, 2025. The legislation will exempt overtime pay from state income tax for all workers who qualify under these conditions. This means that any additional money earned by employees for working more than 40 hours in a week will not be subject to Arkansas state income tax. The tax exemption will take effect for tax years beginning on or after January 1, 2026, giving businesses and employees advance notice of the change. By creating this exemption, the bill aims to provide financial relief to workers who put in extra hours and potentially incentivize overtime work by making such compensation more financially attractive.

Budget and Finance

https://arkleg.state.ar.us/Bills/Detail?id=hb1822&ddBienniumSession=2025%2F2025R