Bill > HB467

This bill amends Alabama's tax code to modify how overtime compensation is treated for income tax purposes. Specifically, the bill removes the previous provision that exempted overtime pay for full-time hourly employees working over 40 hours per week for tax years between December 31, 2023, and October 1, 2024. Instead, it introduces a new exemption for overtime compensation paid in accordance with the U.S. Fair Labor Standards Act, effective October 1, 2024. The bill includes special provisions for employers governed by the National Railway Labor Act, allowing them to apply the exemption based on overtime definitions in their collective bargaining agreements. Employers will be required to submit monthly or quarterly reports to the Department of Revenue detailing the total amount of overtime compensation paid and the number of employees receiving such compensation. Additionally, the bill mandates that the Department of Revenue, in collaboration with the Alabama Commission on the Evaluation of Services, conduct an economic impact study of this exemption by January 1, 2026, which will assess various economic effects including potential impacts on consumer spending. The act is set to become effective on June 1, 2025, providing time for implementation and preparation by affected employers and tax authorities.

Budget and Finance

https://alison.legislature.state.al.us/bill-search