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HF 360

A bill for an act excluding overtime from the individual income tax, and including applicability provisions.

2025-2026 Regular Session Introduced by Jeff Cooling

Bill HF 360 excludes overtime pay from state income tax, boosting take-home income for workers and encouraging employers to offer more overtime opportunities.

Introduced, referred to Ways and Means.
#incometaxes #salariesandwages #taxexemptions
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WeVote Research Nonpartisan
Bill Summary · HF 360

Summary of Bill HF 360

Bill Number: HF 360
Title: A bill for an act excluding overtime from the individual income tax, and including applicability provisions.
Status: Introduced, referred to Ways and Means
Introduced Date: February 12, 2025
Classification: Bill
Subject: Income Taxes, Salaries and Wages, Tax Exemptions

Purpose and Intent

The primary purpose of Bill HF 360 is to amend the state income tax code to exclude overtime compensation from individual income tax calculations. This legislation aims to provide financial relief to workers who earn overtime pay, thereby potentially increasing their take-home income.

Key Provisions

  • Exclusion of Overtime Pay:
    The bill introduces a new subsection to Section 422.7 of the Code 2025, which states that individuals can subtract from their taxable income the portion of compensation earned for workweeks exceeding 40 hours. This compensation must be paid at a rate of at least one and one-half times the regular hourly wage, in accordance with federal law (29 U.S.C. §207).

  • Applicability:
    The provisions of this bill will apply to tax years beginning on or after January 1, 2026. This means that the exclusion will not affect tax filings for the year 2025 but will be relevant for subsequent years.

Impact

  • Affected Individuals:
    The bill is expected to benefit employees who regularly work overtime, particularly those in sectors where overtime is common. This includes industries such as healthcare, manufacturing, and retail, where workers may often exceed the standard 40-hour workweek.

  • Tax Implications:
    By excluding overtime pay from taxable income, workers may see a reduction in their overall tax liability, which could lead to increased disposable income. This change could also encourage more employers to offer overtime opportunities, knowing that their employees will retain more of their earnings.

Procedural Aspects

  • Legislative Process:
    As of its introduction on February 12, 2025, HF 360 has been referred to the Ways and Means Committee for further consideration. The bill will undergo discussions and potential amendments before it can be voted on by the full legislature.

Conclusion

Bill HF 360 represents a significant change in the treatment of overtime pay within the state income tax framework. By excluding overtime compensation from taxable income, the bill aims to provide financial benefits to workers and stimulate economic activity through increased disposable income. The bill's applicability starting in 2026 allows for a transition period for both taxpayers and the state tax system.

Compiled from official sources — confirm details with the bill’s official record.

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